EDEXCEL GCSE BUSINESS · PAPER 1
Exam Practice: Risk and Reward
Risk and reward · Enterprise and entrepreneurship · Lesson 2 of 3 · 13 marks · 25 minutes
Name Date
Answer all questions. Use the context of the business in the question where one is given.
Question 1 MULTIPLE CHOICE [1 mark]
Which one of the following is an example of a reward from business activity? Select one answer. A: Lack of security. B: Profit. C: Business failure. D: Financial loss.
Question 2 DEFINE [1 mark]
Define the term 'entrepreneur'.
Question 3 OUTLINE [2 marks]
Outline one reward an entrepreneur might gain from starting a business.
Question 4 EXPLAIN [3 marks]
Explain one risk an entrepreneur might face when starting a business.
Question 5 ANALYSE [6 marks]
|
SOURCE Kofi has worked as a chef in a hotel kitchen for eight years, earning £30,000 a year. He plans to leave his job and open a Caribbean street-food van, using £12,000 of his savings to buy and fit out the van. He hopes to sell at markets and festivals across the Midlands. |
Analyse the impact on Kofi of the risks involved in starting his street-food business.
Answers
Check your answer only once you have written one.
Question 1 [1 mark]
B - Profit.
▸ B: Profit 1 mark. A, C and D are all risks.
Question 2 [1 mark]
Someone who sets up a business, organising resources and taking risks in the hope of making a reward such as profit.
▸ A person who takes the risk of starting / running a business 1 mark
Question 3 [2 marks]
Independence (1). The entrepreneur can make their own decisions and choose their own working hours, rather than taking orders from an employer (1).
▸ A reward identified: business success / profit / independence 1 mark
▸ Developed: what the reward means for the entrepreneur 1 mark
Question 4 [3 marks]
Financial loss (1). Many entrepreneurs invest their own savings or borrow money to start the business (1). If the business does not attract enough customers and fails, the savings are lost and any loan must still be repaid (1).
▸ A risk identified: business failure / financial loss / lack of security 1 mark
▸ First linked point of explanation 1 mark
▸ Second linked point of explanation 1 mark
Question 5 [6 marks]
The first risk is financial loss. Kofi is using £12,000 of his own savings to buy the van, so if customers do not buy enough food to cover his costs, he could lose much of this money. This means he may be left with little to fall back on if the business fails. A second risk is lack of security. Kofi is giving up a regular salary of £30,000, and his income will now depend on how many customers he has at markets and festivals. Because festivals are seasonal, his income may be very low in winter, making it hard for him to pay his own bills. This means the business must make a profit quickly for Kofi to replace his lost wage.
▸ AO2 (Application, 3 marks): uses the context - Kofi's £12,000 savings, £30,000 salary, markets and festivals Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning showing the impact of each risk on Kofi Level 1-3
▸ Indicative content: financial loss of savings; loss of a secure £30,000 salary; seasonal income; possible business failure Credit any relevant risk