11 mark
Firm X supplies bricks and decides to merge with firm Y that also supplies bricks.
Which form of merger has taken place?
backward vertical
conglomerate
forward vertical
horizontal
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Firms (CIE IGCSE Economics)
Topic Questions
21 mark
Who owns a public sector organisation?
individuals
shareholders
specialist managers
the government
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31 mark
A mining company bought another mining company.
How may this integration be described?
diversification
horizontal merger
specialisation
vertical merger
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41 mark
Which type of business organisation is necessarily in the public sector of the economy?
multinational company
public limited company
public corporation
sole trader
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51 mark
Which type of business is always in the public sector?
monopoly
multinational corporation
public corporation
public limited company
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61 mark
In 2015, a large UK company attempted to acquire a rival US medical company to become the world’s leading supplier. Both companies specialised in the manufacture of medicines for treating rare diseases.
Which term would describe the acquisition if it had been successful?
backwards vertical integration
conglomerate integration
forwards vertical integration
horizontal integration
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71 mark
A large bakery buys a flour mill.
Which form of integration is this?
conglomerate
conglomerate
vertical backwards
vertical forwards
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81 mark
A film production company purchases a group of cinemas.
Of what is this an example?
backward vertical integration
conglomerate merger
forward vertical integration
horizontal integration
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91 mark
A computer chip manufacturer expands by taking over a computer chip designer.
Of what is this an example?
backward vertical integration
diversifying integration
forward vertical integration
horizontal integration
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11 mark
What is an example of a technical economy of scale?
Banks provide loans at a lower interest rate to bigger firms.
Bigger firms hire more workers.
Firms obtain discounts when buying in bulk.
Machines are used closer to their full capacity.
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2
1 mark
1 markWhich of the following is an advantage for a firm expanding through a merger or takeover?
Decreased market share and influence in the industry
Enhanced competition among firms in the industry
Access to new markets, technologies, or resources
Reduced complexity in management and decision-making
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31 mark
1 markWhat might be a problem to a growing firm of failing to respond to diseconomies of scale?
Improved employee morale and job satisfaction
Reduced need for cross-functional teams and collaboration
Increased average costs and decreased profitability
Further ability to adapt to changing market conditions
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41 mark
1 markWhich statement best describes the role of the private sector in the economy?
The private sector consists only of government-owned enterprises
The private sector includes organisations operated by charitable foundations
The private sector includes businesses owned and operated by individuals and corporations
The private sector is limited to small-scale businesses and startups
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51 mark
1 markWhat does the term 'market share' mean in the context of the relative size of firms?
The total number of employees in a company
The proportion of total industry revenue earned by a firm
The physical size of a firm's facilities and offices
The range of products/services in a firm's product portfolio.
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11 mark
What is the definition of diseconomies of scale?
the decrease in average revenue as output increases
the decrease in fixed cost as output increases
the increase in average total costs as output increases
the increase in total costs as output increases
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21 mark
What could cause internal diseconomies of scale for a firm?
a fall in demand for the products produced by the firm
a merger with another firm that results in slower decision-making
spending more on research and development to create new products
the lack of skilled labour in the geographical area where the firm is based
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31 mark
What is a characteristic of tertiary industries?
They are located away from centres of population.
They do not sell to the final consumer.
They tend to be labour-intensive.
They transform raw materials into goods.
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41 mark
Which form of production would be least likely to have the advantages of economies of scale?
car manufacturing
commercial cereal farming
handmade jewellery
refining of oil products
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51 mark
A large pizza chain in the US decided to sell sandwiches as well to try to increase its revenue.
Which term describes this change?
diversification
externalities
horizontal merger
vertical merger
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