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1 (a) When the demand for a product is price sensitive, as the price increases: Select one answer - Edexcel - GCSE Business - Question 1 - 2015 - Paper 1

Question 1

1 (a) When the demand for a product is price sensitive, as the price increases: Select one answer. ☐ A revenue decreases ☐ B costs increase ☐ C costs decrease ☐ D ... show full transcript

Worked Solution & Example Answer:1 (a) When the demand for a product is price sensitive, as the price increases: Select one answer - Edexcel - GCSE Business - Question 1 - 2015 - Paper 1

Step 1

Select one answer.

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Answer

When the demand for a product is price sensitive, an increase in price generally leads to a decrease in quantity demanded. As a result, total revenue decreases, making the correct answer A: revenue decreases.

Step 2

Explain one reason why poor cash flow could lead to business failure.

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Answer

Poor cash flow can lead to business failure because it restricts a company's ability to cover its operational expenses, such as paying wages, rent, and suppliers. If a business is unable to meet its financial obligations due to inadequate cash flow, it may face insolvency, ultimately leading to failure.

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