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Business Calculations Overview

Sep 7, 2025

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Overview

This lecture covers all the essential calculations found in A-Level Business Theme 1, explaining each formula, its meaning, and how to apply it in exam questions.

Calculation Basics & Exam Structure

  • Paper 1 and 2 have two sections of 50 marks each with four-mark calculation questions.
  • Paper 3 may require calculations as part of an eight-mark essay question.
  • Know both how to calculate and interpret results.
  • Practice using past questions and exam grids for thorough preparation.

Market Share

  • Formula: Market share = (Business sales / Total market sales) × 100.
  • Represents the percentage of total market sales earned by one business.
  • Example: £3.2m sales out of £32m market = 10% market share.
  • Always ensure to include all relevant market sales data in total.

Market Growth

  • Formula: Market growth = (Change in market size / Original market size) × 100.
  • Measures percentage increase or decrease in market size.
  • Example: From £4.6bn to £5.3bn, growth = 15.22%.

Market Map

  • A market map visually positions products or businesses within a market based on two variables (e.g., price and quality, or price and age).
  • Label axes and place competitors to show positioning.
  • Subjective but must be logically justified by the context.

Supply and Demand Diagrams

  • Demand: Quantity consumers are willing/able to buy; Supply: Quantity businesses are willing/able to sell.
  • Diagrams must label price and quantity axes.
  • A rightward shift = increase, leftward = decrease; specify which curve shifts.
  • Draw equilibrium points (where supply meets demand) before and after shift.

Price Elasticity of Demand (PED)

  • Formula: PED = % change in quantity demanded / % change in price.
  • PED triangle helps rearrange formula for different unknowns.
  • Inelastic demand: PED > -1; Elastic demand: PED < -1.
  • Negative sign indicates inverse relationship (as price rises, demand falls).

Income Elasticity of Demand (YED)

  • Formula: YED = % change in quantity demanded / % change in income.
  • Positive YED: Normal/luxury goods (demand rises with income); Negative YED: Inferior goods (demand falls as income rises).
  • Use same triangle rearrangement as PED.

Market Pricing (Markup)

  • Formula: Markup (%) = (Profit per item / Cost per item) × 100.
  • Profit per item = Selling price - Cost per item.
  • Indicates the percentage added to cost to determine selling price.

Key Terms & Definitions

  • Market Share — The proportion of total market sales held by one business.
  • Market Growth — The percentage change in market size over a period.
  • Market Map — A chart showing the position of products/businesses in a market along key variables.
  • Demand — Quantity consumers are willing/able to buy at a given price.
  • Supply — Quantity producers are willing/able to sell at a given price.
  • Price Elasticity of Demand (PED) — Measures responsiveness of demand to price changes.
  • Income Elasticity of Demand (YED) — Measures responsiveness of demand to income changes.
  • Markup — The percentage of cost added to determine selling price.

Action Items / Next Steps

  • Practice calculation questions from the provided exam question grid.
  • Review detailed definitions and applications with the Theme 1 recaps playlist.
  • Draw supply/demand diagrams with labeled axes and shifts for practice.
  • Prepare to handle both direct calculations and interpretation questions for exams.

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