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Cambridge IGCSE Economics practice

Paper 2 structured question: Firms

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2

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3

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Firms

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Paper 2Structured Questions3 marks

A large retail chain is considering opening new stores in different regions.

Description

Economies and Diseconomies of Scale

The chain has benefited from economies of scale through centralized purchasing and marketing. However, it has also faced challenges such as increased management complexity and slower decision-making as it has grown.

  1. a

    Explain how economies of scale can benefit the retail chain.

    Aim for approximately 3 distinct marking points.

    [3]

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Paper 2 structured question: Firms

Paper 2Structured Questions1 marks

Description

Impact of Scale on Production Costs

As the firm increased its production, it noticed a decrease in average costs due to bulk purchasing and improved labor specialization. However, after reaching a certain production level, the firm began to experience delays in communication and management issues.

  1. a

    State one internal economy of scale that the firm experienced.

    Aim for approximately 1 distinct marking point.

    [1]