These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
02 Hours 15 Minutes
75 Marks
Calculator is allowed
IB BUSINESS MANAGEMENT HL, Paper 2, November, 2015, TZ0, Solved Past Paper
Master the 2015 IB November for Paper 2 Business Management HL with examiner tailored solutions and comments for TZ0
Question 1 [Explained]
Dan Perdue is a sole trader who specializes in selling bicycles made from recycled materials using environmentally friendly processes. His unique selling point (USP) attracts customers who are willing to pay premium prices, and the demand for these bicycles is price inelastic. Dan currently sources his bicycles from GreenRide, a reputable local manufacturer known for producing high-quality, defect-free bicycles favored by environmentally conscious cyclists. The income elasticity of demand for Dan's bicycles is greater than one, indicating that demand increases significantly as consumer incomes rise.
In this question, you will explore various aspects of Dan's business, including market research, financial calculations, and strategic decisions. You will need to consider the advantages and disadvantages of primary market research, calculate break-even points and profits, and evaluate the implications of income elasticity. Additionally, you will analyze pricing strategies and the importance of branding for a new product line, EcoCycle, and examine the potential benefits and drawbacks of forming a partnership to expand the business.
Question 1 [a] [Explanation]
This question asks you to describe one advantage and one disadvantage of using primary market research for Dan's business. Primary market research involves collecting new data directly from potential customers or the market, which can provide valuable insights specific to Dan's business needs. Consider how this type of research could benefit Dan in understanding his customers better, as well as the potential challenges it might pose, such as cost and time constraints.
Question 1 [b] [Explanation]
This question requires you to perform financial calculations for Dan's business in 2015. Using the provided data, you will calculate the break-even number of bicycles and the total profit for the year. These calculations will help Dan understand his financial position and make informed decisions about pricing and production levels.
Question 1 [b] [i] [Explanation]
Calculate the break-even number of bicycles for Dan in 2015. The break-even point is the number of units that must be sold to cover all fixed and variable costs, resulting in zero profit. Use the formula: Break-even point =
Question 1 [b] [ii] [Explanation]
Calculate the total profit for Dan in 2015. Profit is calculated as Total Revenue minus Total Costs. Use the formula: Profit = (Selling Price × Quantity Sold) - (Fixed Costs + Variable Costs × Quantity Sold). Show all your working.
Question 1 [c] [Explanation]
Explain one benefit for Dan of the income elasticity of demand for his bicycles being greater than one. Income elasticity of demand measures how the quantity demanded of a good responds to changes in consumer income. A value greater than one indicates that demand is income elastic, meaning that demand increases more than proportionately as income rises. Consider how this characteristic could benefit Dan's business, especially in a growing economy.