IGCSEEconomicsCambridge (CIE)Exam Questions3. Microeconomic Decision Makers3.5 Firms

Firms (Cambridge (CIE) IGCSE Economics)

Exam Questions

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3.5 Firms

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3.5 Firms

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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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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 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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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
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Which 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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3
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What 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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4
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Which 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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5
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What 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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