BUSINESS CYCLE BASICS
What are the four stages of the business cycle?
Peak, Contraction, Trough, Expansion
What is the purpose of R&D?
To improve products or create new ones.
What does the “P” in Promotion refer to?
How a business communicates with customers.
What happens to output when demand falls?
Output decreases.
What type of product is the iPhone SE?
A lower‑cost/value iPhone.
What is one sign an economy is entering a contraction?
Rising unemployment / falling consumer confidence.
Why is R&D expensive?
It requires skilled workers, technology, and time.
What is one example of “Place”?
Online store / physical store / delivery app.
Name one factor that affects output.
Consumer demand / worker availability / technology.
Why did Apple face production delays in China?
COVID‑19 disruptions.
Why do businesses worry during a trough?
Demand is lowest and revenue falls.
How does R&D help a business stay competitive?
Innovation attracts customers and keeps the business ahead of rivals.
Why is understanding your target market important?
It helps businesses design products and marketing that match customer needs.
Why do businesses monitor demand closely?
To avoid producing too much or too little.
Why does Apple invest heavily in R&D?
To innovate and stay ahead of competitors.
How might a business misinterpret economic indicators and make a poor decision during a contraction?
By assuming demand will recover quickly and overspending on production or marketing.
Why can cutting R&D during a recession harm a business in the long term?
It slows innovation, reduces competitiveness, and allows rivals to overtake them.
Explain why “Place” becomes more important when consumers shift to online shopping during weak economic conditions.
Businesses must adapt distribution to cheaper, more convenient channels to maintain sales.
Explain how poor forecasting can cause both oversupply and undersupply problems during changing economic conditions.
Overestimating demand leads to excess stock; underestimating demand leads to shortages and lost sales.
Explain how Apple’s decision to diversify production reduces both economic and geopolitical risk.
It prevents dependence on one country, protecting output from disruptions like recessions, political tensions, or supply chain failures.
Explain how rising unemployment and falling inflation together signal a deeper economic problem.
Rising unemployment shows falling demand for labour, and falling inflation shows weak consumer spending — together they indicate a recession.
Explain how R&D decisions can influence a business’s market share during both strong and weak economic conditions.
Strong conditions allow investment in new products that expand market share; weak conditions risk losing market share if innovation stops.
A business wants to raise prices during a downturn. Explain one situation where this might still succeed.
If the business targets a niche market with high brand loyalty or sells essential goods.
Why might a business reduce output even if demand hasn’t fallen yet?
To avoid future losses if indicators predict a downturn or to reduce costs proactively.
How did Apple’s release of the iPhone SE demonstrate both marketing strategy and economic adaptation?
It targeted value‑focused consumers during recession (Price/Product) while maintaining sales volume despite falling consumer spending.