Edexcel Economics & Business
Central Foundation Boys’ School
Edexcel Economics & Business
Homework Packs
Key dates:
 Final deadline for all the work listed below: 17th October 2011
(Can be handed in earlier to get extra feedback on your work)
 End of term assessment will be on the 20th October 2011
Teacher
AB
Content
Activity 1:
choosing finance methods
Link to spec
1.3.5
MD
Activity 2:
falling beer sales
1.3.2
MD
Activity 3:
Demand and supply
exercises
1.3.2
AB
Activity 4:
Jane and Hugh garden
seats (JHGS)
1.3.6
Learning outcome
Be able to identify and
explain suitable sources
of finance for various
business scenarios
Be able to identify and
assess the impact of
changing demand in a
specific market
Be able to draw supply
and demand curves
using figures and then
assessing its impact on
businesses
Be able to calculate and
understand the
importance of break
even, profit and the
margin of safety

Email completed homework to Mr Dilley
dilleym@cfbs.islington.sch.uk or Ms Begum
beguma@cfbs.islington.sch.uk

See specified teacher if you need help with any of the activities
1
Edexcel Economics & Business
Central Foundation Boys’ School
Activity 1: choosing finance methods
2
Edexcel Economics & Business
Central Foundation Boys’ School
Activity 2: falling beer sales
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Edexcel Economics & Business
Central Foundation Boys’ School
Activity 3: Demand and supply exercises
1. Below is the demand and supply for wine grapes in Upper Sonomia, a major wineproducing region of Slobovia.
Price
(Per Ton)
$40
60
80
100
120
140
160
180
200
Quantity Demanded
(Tons per Month)
2000
1800
1600
1400
1200
1000
800
600
400
Quantity Supplied
(Tons per Month)
500
600
700
800
900
1000
1100
1200
1300
Draw the above demand and supply curves
a. There will be a shortage of wine grapes at any price [above/below] ________ a price of $
_____.
b. There will be a surplus of 300 tons when the price is $ _____.
c. At a price of $60, there will be a [surplus/shortage] of _______ tons.
d. Assume that the government decides to help wine consumers by putting a ceiling of $100
per ton on grapes. What would happen? Would the price ceiling be ineffective or would the
price ceiling prevail?
e. Assume that the government decides to help grape growers by legislating a price floor of
$180 per ton. What would happen?
f. If the government were to impose a price ceiling of $160 per ton, what would happen?
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Edexcel Economics & Business
Central Foundation Boys’ School
2. Does each of the following events INCREASE, DECREASE, or HAVE NO EFFECT on
the DEMAND or SUPPLY of wine in the short run? Which way does the
DEMAND/SUPPLY curve shift? What determinant has changed?
EXAMPLE:
EVENT: The price of beer increases.
ANSWER: The demand for wine will increase. It shifts to the right. Beer and wine are
substitute goods. When the price of a substitute good falls, the demand for the other good
increases.
YOUR TURN:
a. EVENT: Government statistics show that average household income is rising.
ANSWER:
b. EVENT: Because of advances in gene splicing technology, new healthier varieties of
grapes are developed.
ANSWER:
c. EVENT: A private research institute announces that people who drink a glass of wine
a day have fewer heart attacks.
ANSWER:
d. EVENT: There is a very rainy season causing many grapes to rot on the vine before
they have matured.
ANSWER:
e. EVENT: The government begins paying a $.50 per pound subsidy to wine producers.
ANSWER:
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Edexcel Economics & Business
Central Foundation Boys’ School
3. This exercise is designed to help you recognize how activity in one market affects what
happens in other markets. In the blanks provided, indicate whether demand, supply,
equilibrium price, and equilibrium quantity increase (+), decrease (-), or do not change (0). If
the effect cannot be determined from the information given, use (U). You should use a
supply and demand diagram to help you derive the answers to the questions. The first one is
done for you.
MARKET
EVENT
a. Poultry
Fish becomes scarce and costly AND a university research group
invents a quicker way to process chicken.
b. Hamburger buns
The price of hamburger decreases because of an increase in the
supply of beef
c. Corn
The development of a more effective insecticide for killing
rootworm (an insect which destroys corn plants)
d. Used clothing
A decrease in consumers' incomes
e. Train
Transportation
Competition among airlines causes a reduction in air fares
f. Lettuce
An increase in the price of irrigation equipment
g. Oranges
A freeze in Florida
D S P Q
+ + U +
EXPLANATIONS:
a. In this problem, two determinants are changing. 1) Fish and poultry are substitutes at the
grocery store. They are substitutes for the buyer. An increase in the price of a substitute
good for poultry will cause the demand for poultry to increase. 2) When the university
research group invents a quicker way to process chicken, this is a change in technology which
lowers the cost of producing poultry. This will increase the supply of poultry.
So now we have an increase in the demand for poultry coupled with an increase in the supply
of poultry.
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Edexcel Economics & Business
Central Foundation Boys’ School
Activity 4: Jane and Hugh garden seats (JHGS)
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