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Resource Articles

Spotlight: Consumer Income in GCSE Business

In the latest Spotlight article, we consider the impact of consumer income on businesses.


In his first week as Prime Minister, Andy Burnham announced that the bus fare cap in England will be reduced to £2 from January 2027. In GCSE Business (Edexcel) we explore how the economy affects businesses, including the effects of consumer income. So, what does this reduced bus fare cap mean for businesses in the UK?


A London bus driving with the Houses of Parliament in the background. Includes the Study Smiles Spotlight logo.


Consumer Income

The main aim of the Government announcing this new policy is to try to increase consumer income levels as so many people are struggling with the continued cost of living crisis. The lower fare cap will mean that people who use buses to get to work, hospital appointments or to get to the shops, will pay less for their journeys and, consequently, have higher consumer income left to spend on other needs or wants.



Bus Companies


Bus companies, outside London, will charge a maximum of £2 for single tickets from January. However, the Government will reimburse the bus companies for the difference between ticket price and the fare cap. This means the bus companies will, in effect, receive the same price for tickets as if there wasn't the fare cap.


There could be other benefits for the bus companies. The £2 fare cap will make bus travel cheaper and more affordable for consumers. Therefore, there may be an increase in customers using buses resulting in an overall increase in number of sales. The net effect could be an increase in sales revenue for the bus companies.



Summary of Possible Effects of Reduced Bus Fare Cap


  • Consumer income available for other needs and wants will increase

  • Number of customers may increase for bus companies

  • Sales may increase for other companies


Note that there may well be other effects. This article aims to provide the highlights applied to the GCSE Business (Edexcel) specification.




Key Term

Consumer Income

The amount of money households or consumers have to spend on their needs and wants.

Free downloadable Key Terms document to support GCSE Business (Edexcel) is available under Business Resources.



Spotlight is a series of Resource Articles from Study Smiles which highlight and link current affairs to elements of the GCSE Business (Edexcel) and GCSE Statistics (Edexcel) specifications. An ideal way to consolidate your learning and build a bank of examples.



 
 
 

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