A-level Business (7132) · Paper 1: Business 1
RA10 predicted paper · June 2027 · Set C · Question paper · Time allowed: 2 hours · Maximum mark: 100
Instructions- Answer all questions in Section A and Section B.
- Answer either Question 21 or Question 22 in Section C.
- Answer either Question 23 or Question 24 in Section D.
- Section A: 15 marks · Section B: 35 marks · Section C: 25 marks · Section D: 25 marks.
- You may use a calculator.
Written by RA10 from a question-by-question analysis of the AQA 7132 papers 2020-2025 and the v2.0 specification. This is not an official AQA paper and does not contain real exam questions.
Section A
Answer all questions in this section. Only one answer per question is allowed.
[1 mark]01Which one of the following is most likely to cause a company's share price to rise?- A An announcement of lower-than-expected profits
- B An increase in interest rates
- C Rumours of a takeover bid for the company
- D The resignation of a successful chief executive
[1 mark]02Which one of the following is a measure of brand loyalty?- A Market share
- B Percentage of customers who make a repeat purchase
- C Sales growth
- D Total market size
[1 mark]03Which one of the following is an extension strategy?- A Launching an entirely new product
- B Reducing promotion as sales fall
- C Selling the existing product to a new target market
- D Withdrawing the product
[1 mark]04A bakery buys ingredients and packaging for £0.60 per cake and sells each cake for £2.40. The value added per cake is:- A £0.60
- B £1.80
- C £2.40
- D £3.00
[1 mark]05Statement 1: 'Just in Time reduces the cost of holding inventory.'
Statement 2: 'Just in Case makes a business less able to meet unexpected increases in demand.'
Read Statements 1 and 2 and select the correct option.- A Statement 1 is true. Statement 2 is true.
- B Statement 1 is true. Statement 2 is false.
- C Statement 1 is false. Statement 2 is true.
- D Statement 1 is false. Statement 2 is false.
[1 mark]06A business has an opening cash balance of £12 000. In the month, cash inflows are £45 000 and cash outflows are £51 000. Its closing balance is:- A -£6 000
- B £6 000
- C £18 000
- D £108 000
[1 mark]07Budgeted costs were £300 000 and actual costs were £330 000. Budgeted revenue was £400 000 and actual revenue was £420 000. The profit variance is:- A £10 000 adverse
- B £10 000 favourable
- C £30 000 adverse
- D £50 000 favourable
[1 mark]08Which one of the following is a feature of a hard HRM approach?- A Employees seen as a resource to be managed to minimise cost
- B Long-term workforce planning focused on development
- C High levels of delegation and empowerment
- D Regular consultation with employees
[1 mark]09A business has total employee costs of £1.2m and revenue of £4.8m. Its employee costs as a percentage of turnover are: [1 mark]10Which one of the following is most likely to be a tactic rather than a strategy?- A Entering the Chinese market over the next five years
- B Merging with a major competitor
- C Offering 20% off for a weekend sale
- D Repositioning the brand as premium
[1 mark]11Elkington's Triple Bottom Line measures business performance in terms of:- A people, planet and profit.
- B price, product and promotion.
- C profit, liquidity and gearing.
- D shareholders, customers and employees.
[1 mark]12Strong patents and high start-up costs in a market are most likely to:- A increase buyer power.
- B increase the threat of substitutes.
- C reduce the threat of new entrants.
- D reduce supplier power.
[1 mark]13A UK coffee chain starts selling its own branded coffee machines to its existing customers. According to Ansoff's matrix this is:- A diversification.
- B market development.
- C market penetration.
- D product development.
[1 mark]14Statement 1: 'Automation is likely to increase the proportion of fixed costs in a business's total costs.'
Statement 2: 'Automation is likely to reduce labour productivity.'
Read Statements 1 and 2 and select the correct option.- A Statement 1 is true. Statement 2 is true.
- B Statement 1 is true. Statement 2 is false.
- C Statement 1 is false. Statement 2 is true.
- D Statement 1 is false. Statement 2 is false.
[1 mark]15A strategy that develops over time in response to unforeseen events is called:- A a contingency plan.
- B an emergent strategy.
- C a planned strategy.
- D strategic drift.
Section B
Answer all questions in this section.
[4 marks]16A business is deciding whether to launch a new product (Option 1). The launch costs £120,000.
There is a 0.55 probability of a high demand outcome worth £400,000 and a 0.45 probability of a low demand outcome worth £150,000.
Option 2, modifying an existing product, has a net gain of £140,000.
(a) Calculate the expected value and net gain of Option 1. Show your working. [3 marks]
(b) State which option the business should choose, based on these figures. [1 mark] [4 marks]17A company is considering buying new equipment for £2,400,000. The expected net returns over its five-year life are:
Year 1: £600,000
Year 2: £800,000
Year 3: £900,000
Year 4: £900,000
Year 5: £700,000
Calculate the average rate of return (ARR). Show your working. [9 marks]18Analyse why a large business might decide to retrench. [9 marks]19Analyse how an increase in the rate of corporation tax (tax on company profits) might affect the investment decisions of a large manufacturing business. [9 marks]20A call centre introduces flexible working, allowing staff to choose their shift patterns and work some days from home.
Analyse how this might improve employee motivation. Section C
Answer either Question 21 or Question 22.
[25 marks]21To what extent is a low-cost positioning strategy more appropriate than differentiation for a business operating in a market where buyers have a lot of power?
OR
[25 marks]22To what extent does the successful implementation of a strategy depend on effective communication?
Section D
Answer either Question 23 or Question 24.
[25 marks]23'Cash flow is more important than profit for all businesses.'
Do you agree? Justify your view.
OR
[25 marks]24'Social media has made traditional forms of promotion unnecessary.'
Do you agree? Justify your view.