Please answer B with procurement.

FRESHBAKE LTD Figure 1 UK GDP per capita (average individual income) between 2004 and 2014 40,500- 40,500 40,000 40,000 39,500 39,500 39,000 39,000 38,000 38,000 38,000 38,000 37,500 37,500 37,000 37,000 2004 2006 2008 2010 2012 2014 GDP per capita in US dollars at constant prices since 2000 Source: adapted from www.tradingeconomics.com Freshbake Ltd is a large baker in the West Midlands. It Q delivers to independent retailers and small supermarkets (a) What is meant by the term income inelastic? (2 marks) in the region. Up until 2003, 80 per cent of its sales were bread, bread rolls and other bread-related products. In (b) Assuming average income fell by 7 per cent, calculate 2003 it started to focus more on the market for cakes - the percentage change in demand for Freshbake's cakes fresh cream cakes in particular. The switch in emphasis paid between 2008 and 2010. (4 marks) off. By 2008, slightly more than 40 per cent of Freshbake's (c) Explain one reason why demand for Freshbake's cakes revenue was from the sale of cakes - while sales of bread changed between 2008 and 2010. (4 marks) products remained stable. (c) Assess how useful income elasticity is for a business like Unfortunately, between 2008 and 2010, sales of cakes fell Freshbake Ltd. (12 marks) sharply. This caused the business difficulties. It had built up cake-baking capacity since 2003 and the fall in demand from 2008 meant that staff had to be laid off and some investment in new machinery cancelled. It was estimated by the business that income elasticity of demand for bread and cakes was 0.6 and 3.9 respectively. Figure 1 shows UK GDP per capita (average individual income) between 2004 and 2014