Jacqueline Chang produces and sells a range of office furniture and equipment. She wishes to increase her sales and also her profit. The pie chart in Fig. 2 shows how her sales for 2010 are divided between different sectors of the economy. Public PUBLIC SECTOR Manufacturing corporations companies 20% 20% Government departments 15% Service industries 30% Primary industries 15% PRIVATE SECTOR Sales Pattern for 2010 [Figure 2] Use the information shown in Fig. 2 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2011). The mark or mark type is shown in brackets.

1. [4] (a) (i) Any four points that should show the differences x 1 mark each: public sector consists of organisations that are state-owned; example such as public corporations; funded by the government; provide a service; aim to break even; private sector consists of organisations that are privately-owned either collectively or singly; example such as public limited companies, sole traders; funded by owners or shareholders; aim to make profits. Any other relevant point.
2. [2] (ii) An industry that provides a service (rather than makes goods) to others (1): such as transport, banking, insurance (accept a company offering a service) (1); such as direct service, e.g. teaching (1). Any other relevant point.
3. [2] (b) (i) 20% + 15% (1) = 35% (1) OFR applies. Award full marks if correct answer is shown without working.
4. [2] (ii) 15/100 x $5m (1) = $750 000 (1) OFR applies. Award full marks if correct answer is shown without working.
5. [6] (c) Any three ways x 2 marks each: lower her prices in the hope that reduced prices will attract buyers (discounts); look for new markets such as private buyers, other countries; introduce new products such as new office furniture; change her advertising – different media, different methods of appeal, to attract buyers; increase prices – doubtful strategy if there is much competition – may attract buyers if the product is scarce; contact existing customers and customers who have bought before in the hope of making new sales; offer special promotions – free office chair with every desk; offer new ways of purchasing her products – better website and online purchasing; offer better credit terms to regular customers – longer repayment periods; improve quality – give value for money, improve reputation; introduce warranties – as part of after-sales service. Any other relevant method.
6. [4] (d) Level 2 (3-4 marks) Candidate has given a reasoned opinion showing how net profit may be affected or not affected by increased sales. Net profit may increase if sales increase but it may not be in the same proportion. Net profit may be reduced by increased expenses. If Jacqueline Chang uses more advertising and a promotion, her marketing expenses will increase and so her total expenses will increase. Her gross profit may be reduced because the cost of the goods she has sold may have increased. Again, this would affect her net profit. Level 1 (1-2 marks) Candidate has made some comment on sales and net profit, possibly with some doubtful assumptions made. If Jacqueline Chang increases her sales, her net profit should increase. If sales increase, hopefully gross profit will increase. Then her expenses are deducted to calculate net profit.