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9609 · 6.1.1

Political and legal — practice questions

Practice and worked examples for 9609 Political and legal. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

A UK food exporter sells to Country X, which imposes a 25% import tariff on processed foods. Analyse two business impacts.

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1. Pricing/competitiveness: Tariff raises landed cost 25% — either absorb (lower margin) or raise price (lose volume to local producers). May need local production (6.1.6) to avoid tariff.

2. Strategic uncertainty: Trade policy may change with elections — long-term investment in Country X riskier; firm may diversify markets or lobby for free trade agreement.

Worked example 2

A retail company employs 50 staff members who each work 30 hours per week. They are all paid the national minimum wage, which the government has just increased from $10.00 per hour to $11.50 per hour. Calculate the total annual increase in the company's wage bill.

Show solution outline

This legal change (an aspect of employment law) directly impacts the company's labour costs. The financial impact can be calculated as follows:

Step 1: Calculate the current annual wage bill for the affected employees.

  • Total weekly hours = 50 employees × 30 hours/employee = 1,500 hours
  • Current weekly wage bill = 1,500 hours × $10.00/hour = $15,000
  • Current annual wage bill = $15,000/week × 52 weeks/year = $780,000

Step 2: Calculate the new annual wage bill after the increase.

  • New weekly wage bill = 1,500 hours × $11.50/hour = $17,250
  • New annual wage bill = $17,250/week × 52 weeks/year = $897,000

Step 3: Calculate the total annual increase.

  • Annual increase = New annual bill - Current annual bill
  • Annual increase = 897,000−897,000 - 780,000 = **117,000∗∗117,000**

Final Answer: The legal change will increase the company's annual wage bill by $117,000. This represents a 15% increase in labour costs for this group of employees ($117,000 ÷ 780,000=0.15).780,000 = 0.15).

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