Leo owns a garage in the centre of a town located in country A. The garage has a lot of stock of cars for sale. It also sells petrol and has a shop selling a wide range of food. 'Petrol is a loss-leader for my garage' said Leo. 'Most of my profit comes from selling cars and I am looking for ways to increase the profits of the rest of my business.'

1. (a)What is meant by a loss leader?[2]
2. (b)Identify two overhead costs that you think Leo's garage would have to pay.[2]
3. (c)The Government in country A has raised interest rates. Explain the impact that this increase might have on the profits of Leo's garage.[4]
4. (d)Identify and explain three ways in which Leo could promote his business.[6]
5. (e)Although Leo's business is profitable it has a cash flow problem. Recommend two methods that Leo could use to help solve the problem. Justify your recommendations.[6]