RUN THE NUMBERS.
Set a price, pay the costs and see the profit that is left, then slide four rival firms around and watch who owns the market.
Where the money goes
FIG. 01 · FINANCE · 6.2The cost of making one more: materials, packaging, the wages of the person who makes it.
Rent, insurance, salaries — you pay these whether you sell 10 units or 10,000.
—
What the exam wants: revenue = price × quantity; gross profit = revenue − variable (direct) costs; net profit = gross profit − fixed costs; and each margin is that profit ÷ revenue × 100. Show the working and the units. The analysis mark comes from what you notice: raising price lifts profit fast until customers stop buying, while cutting fixed costs helps at every level of sales.
Who owns the market?
FIG. 02 · THE MARKET · 1.4Market share = your sales ÷ total market sales × 100. Notice that your share can fall while your sales rise, if rivals grow faster.
—
What the exam wants: 1.4 asks you to calculate market share and then use it. A high share means brand recognition, bargaining power with suppliers and economies of scale; a growing market can hand every firm rising sales while shares stay flat. Always say whether the market itself is growing before you judge whether a firm is winning.