Lesson 3.1.3

3.1.3 Understanding that businesses operate within an external environment Quiz: AQA Business, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.1.3, Understanding that businesses operate within an external environment: 20 multiple choice questions for the AQA Business (7132), Unit 1: What is business?, written with Revision Ninja.

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The 20 questions

  1. Which factor is a demographic influence on demand for a business's products?

    • New government regulations on packaging waste
    • Exchange rate appreciation making imports cheaper
    • An ageing population increasing demand for healthcare products
    • Rising interest rates reducing consumers' borrowing

  2. Which external factor most directly affects the cost of borrowing for a business?

    • Changes in the age profile of the population
    • Changes in fair trade certification rules
    • Changes in the Bank of England base rate
    • Changes in the number of competitors in the market

  3. What is the usual effect of a rise in consumer incomes on demand for normal goods?

    • Demand tends to increase
    • Demand stays the same
    • Demand tends to fall
    • Demand falls sharply to zero

  4. Which is an example of fair trade influencing a business's costs?

    • Relocating production to countries with lower labour standards
    • Paying farmers a guaranteed minimum price, which raises the cost of supplies
    • Cutting packaging to reduce waste disposal costs
    • Reducing prices to undercut local competitors

  5. Increased competition in a market is most likely to:

    • Increase demand for every firm's product
    • Put downward pressure on prices and on the demand each firm receives
    • Raise prices as firms collude to protect profits
    • Remove any need for marketing expenditure

  6. Which environmental issue is most likely to increase a business's costs?

    • A carbon tax on energy use
    • Greater supplier competition for raw materials
    • Lower demand for recycled packaging
    • Cheaper raw materials caused by deforestation

  7. Market conditions refers to:

    • The number of employees the business has at a given time
    • The internal structure of the business's management team
    • The overall state of supply and demand in a market, such as growth or recession
    • The legal framework that governs trading standards

  8. A business has a 500,000 variable-rate loan and the base rate rises by 1 percentage point, which passes fully to the loan. What is the extra interest per year?

    • 50,000
    • 500
    • 5,000
    • 10,000

  9. A population's share of people aged 65 and over is projected to rise from 15% to 22%. Which type of business is most likely to benefit?

    • A business selling nursery furniture
    • A business selling mobility aids and retirement holidays
    • A business selling school uniforms
    • A business selling skateboards and gaming consoles

  10. A luxury good has an income elasticity of demand above 1. Which statement is correct?

    • Demand rises by a smaller percentage than income rises
    • Demand is unaffected by changes in income
    • Demand rises by a larger percentage than income rises
    • Demand falls as income rises

  11. A rival opens a cheaper outlet nearby and a business's weekly sales fall from 1,200 to 900 units. What is the percentage fall?

    • 75%
    • 25%
    • 20%
    • 33%

  12. A coffee shop switches to fair trade coffee, which costs 15% more per kilogram. What is the most likely effect on its costs?

    • Variable costs per cup rise, which may reduce profit unless prices rise
    • Demand for coffee falls to zero
    • Fixed costs such as rent rise by 15%
    • Total costs fall because fair trade coffee lasts longer

  13. A strengthening pound makes a UK exporter's goods more expensive for overseas buyers. What is the most likely effect?

    • Cheaper exports for overseas buyers
    • Increased demand for the exporter's goods abroad
    • Lower costs for imported raw materials
    • Reduced demand for the exporter's goods abroad

  14. In a recession, what is the most likely change in consumer spending on luxury goods?

    • Demand for all products rises as prices fall
    • Demand for luxury goods rises as consumers seek comfort
    • Consumers cut spending on discretionary products, so demand for luxury goods falls
    • Firms are unaffected because their costs also fall

  15. A business notices its local area has a rising youth population. Which response best fits this demographic change?

    • Closing all lines aimed at younger customers
    • Withdrawing from the local market entirely
    • Expanding the product range to meet the needs of younger customers
    • Raising prices for older customers only

  16. Evaluate: which argument best explains why a rise in interest rates may not always reduce a firm's demand?

    • Interest rates never affect consumers' borrowing
    • Higher rates always raise consumer spending on all goods
    • Interest rates affect only exporters, not domestic firms
    • Demand for essential or cash-rich products can be stable, so the effect depends on how far customers rely on borrowing

  17. A business sells 20,000 units at 8, with variable costs of 4 per unit and fixed costs of 30,000. Competition forces a 10% price cut, and an environmental levy adds 1 per unit. What is the new profit?

    • 20,000
    • 14,000
    • 34,000
    • 50,000

  18. Which is the best evaluation of the effect of an ageing population on a supermarket?

    • An ageing population guarantees growth for every type of retailer
    • An ageing population reduces food demand so the supermarket should close
    • Demand may grow for some products, but labour and product mix must adapt, so the net effect depends on the business's response
    • An ageing population has no effect because demographics never change

  19. During an economic downturn, falling incomes would most likely cause which change in demand for inferior goods?

    • Demand becomes perfectly inelastic
    • Demand falls, as consumers switch to normal goods
    • Demand rises, as consumers switch away from normal goods
    • Demand stays exactly the same

  20. A business has 2,000,000 of debt at 4% interest, with profit before interest of 1,000,000. The rate rises to 6%. What is the new profit after interest?

    • 1,000,000
    • 920,000
    • 880,000
    • 840,000

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