Sari and Ismail have opened a shop selling computers. They also repair customers' computers. They work in the tertiary sector of production.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2013). The mark or mark type is shown in brackets.

1. [2] (a) (i) Any two points × 1 mark each: the third stage of production; involving the provision of services; such as commercial services; and direct services; any other relevant point
2. [1] (a) (ii) One mark for either primary (extractive) or secondary production
3. [2] (b) (i) any one advantage explained × 2 marks: Ismail may become more skilled so can offer a better service to customers; Ismail may be able to repair more computers and so may be able to reduce prices; Ismail may be able to offer a service not offered elsewhere + example; any other relevant advantage
4. [2] (b) (ii) Any one advantage explained × 2 marks: Sari may be able to offer a better level of customer service so more customers will come to the shop; Sari may get to know individual customers and so offer them personal service; customers may have greater satisfaction and recommend the shop to others; better service may lead to increased sales revenue and possibly greater profits; any other relevant advantage
5. [2] (c) (i) $12 000 + $44 000 (1 mark) = $56 000 (1 mark) OFR applies. Accept correct answer without working for full marks.
6. [2] (c) (ii) $56 000 – $25 000 (1 mark) = $31 000 (1 mark) OFR applies especially from (c)(i). Accept correct answer without working for full marks.
7. [1] (c) (iii) One mark for expenses/overheads
8. [2] (c) (iv) Any one reason explained × 2 marks: so that they do not go out of business and lose the money they have invested in the business; so that they can use the profit to provide themselves with an income; so that they can use the profit to pay back any loans they may have and also to pay the interest; so that they have money to reinvest in the business in order to improve/expand it; so that they do not need to borrow money to keep going; any other relevant point
9. [6] (d) Level 2 (4-6 marks) Has discussed whether or not Ismail should stop specialising in repairs and help Sari with sales and, using the figures, has given a reasoned judgement. (If no figures are considered, award 4 marks max.) The income from repairs is certainly less than the income from computer sales. It should, however, be remembered that the gross profit from computer sales is $19 000 i.e. $44 000 – $28 000 so there is only $7000 difference. We do not know what expenses are incurred when undertaking the repairs. The overall expenses of the business are also not given. By offering the repair service, the business is offering an after-sales service. Customers who buy computers will expect to be able to return to the shop if they experience problems. Other people who have bought computers elsewhere will also be able to use the shop and so this should bring additional business. If Ismail offers a good level of service, it is likely that income from repairs will increase. It may also be the case that Ismail is no good at selling and prefers to work in the background. If the repair service was not offered, he might not have enough work. On the other hand, Sari may be overworked and needs some help. We do not know. If Ismail helped her, they might sell other products. If he does not, they might need to employ another person. However, this is only the first year of trading. A more informed judgement may be made when the business has been going for longer but, on balance, Ismail should continue to repair computers. Level 1 (1-3 marks) Has commented on whether or not Ismail should stop repairing computers with/ without mentioning any of the figures. The business is making less from repairing computers than from selling them. Repairs costs less than a new computer. Repairing computers brings more business. Ismail should continue.