Assume that the rate of interest rises.

Evaluate which of the two businesses (Big Pit and The

Snowdon Mountain Railway) is likely to be affected the most. [15]

Overall, if interest rates rise. I don’t know which business is likely to be affected the most.
How many customers does each business have? Has it been successful in the past? It depends on
how long the rise in interest will be. Since the Big Pit is the oldest mine in South Wales and a tourist
attraction, the government might help fund it so it will be less affected compared to The Snowdon
Mountain railway, However, if the interest rates increase through the months from March to
November, it won’t affect Snowdon Mountain Railway at all since they don’t operate then, therefore
The Big Pit is more likely to be affected. However, The Snowdon Mountain Railway need to create
contingency plans, encase interest rates do still increase when they are not operating, just to ensure
they won’t be affected. Furthermore, in a customer viewpoint, if interest rates are only going to rise
in the short-term, it will have less likely an effect since they will go back to normal soon, therefore it
won’t likely affect either business at all. However, if interest rates keep increasing in the long-term,
customers are more likely to save, therefore each business has fewer potential customers and will
affect both businesses.

When interest rates increase, it will also increase the business costs, therefore it will most
likely affect both businesses equally. However, it depends on how much interest rates increase by. If
interest rates do increase a short amount, its most likely not going to affect them that much. Both
businesses could change their PED to the increase in interest rates, so they are still operating at the
same level of level demand. However, if interest rates increase drastically, both businesses will be
affected varyingly. Since customers are more likely to save, it may mean that less possible workers
are needed. Therefore, causing redundancies for the old miners or possible pay cuts. Furthermore,
for the managers, it will also mean less profits for them, as less people are likely to use the gift-shop,
however, we don’t know the prices within the gift store, so we don’t know how much it will affect
them. However, it will more likely affect Snowdon Mountain Railway. Interest rising will cause the
fuel prices for the train to also increase, it’s possible that the train might have to go out of order if
they can’t keep up to date with the costs of the train. This will affect them greatly since they have
lost their USP. However, there will still be customers that may choose to walk up the mountain
instead. Once they reach up they will still be greeted to the café and souvenir shop. Customers may
not care about the prices of the Café since they are feeling exhausted. However for the souvenir
shop, they may spend as much. Again it depends on the prices they have.

Finally, it also depends on if there has been a trend seen in the past or not? If not, it will
most likely affect both business equally as they won’t be prepared for it.