IGCSE Economics - Paper 1 Solved
ADV and disADV of a Monopoly:
*Advantages (3x)
*Disadvantages (4x) - ANSWER-ADV of a monopoly:
-Innovation (Lots of profits to invest in R&D)
-Efficiency (natural monopolies are more efficent)
-Economies of scales
Dis-ADV of a monopoly:
-Higher prices
-Restricted choice
-Lack of innovation (No need to innovate)
-Inefficiency (No incentive to keep costs down for competition)
ADV and disADV of a Oligopoly:
*Advantages (5x)
*Disadvantages (1x) - ANSWER-ADV of a Oligopoly:
-Choice
-Quality
-Economies of scale
-Innovation
-Price wars
Dis-ADV of a Oligopoly:
- Collusion
ADV and disADV of being a large firm:
*Advantages (3x)
*Disadvantages (3x) - ANSWER-Advantages:
-Economies of scale
-Market domination (Higher profile in the public eye)
-Large-scale contracts (Small firms wouldnt be able to compete with large firms for a
contract for infrastructure projects)
Disadvantages:
-Too bureaucratic (Decision making can be slow)
-Coordination and control (Need for more supervision)
-Poor motivation (Workers feel alienated)
ADV and disADV of being a small firm:
*Advantages (5x)
*Disadvantages (4x) - ANSWER-Advantages:
-Flexibility (Easy to make decisions)
, -Personal service
-Lower wage costs (Do not belong to trade unions so can pay minimum wage)
-Better communication (Faster communication)
-Innovation (Face pressure to innovate because otherwise they will lose market share)
Disadvantages:
-Higher costs (Cannot exploit economies of scale)
-Lack of finance
-Difficult attracting quality staff
-Vulnerability (difficult to survive in times of harship)
ADV and disADV of competition to firms and consumers? - ANSWER-To firms:
- Operating efficiently to cut costs (Maybe less profits)
- Increase costs in R&D
To consumers:
- Lower prices -> ADV
- More choice -> ADV
- Better quality -> ADV
- Market uncertainty (Unprofitable firms cannot compete and may leave the market with
is consumer inconvenience)
- Lack of innovation (Cut costs = Less profit = Less innovation
Advantages and Disadvantages of 'division of labour'
- Labour
- Businesses - ANSWER-ADVANTAGES
For labour:
More skilled and more employable for the future
More skilled = Higher wages
For businesses:
Improvement in efficiency (Output per person)
Production time is reduced
Learning by doing
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DISADVANTAGES
For labour:
Lower motivation = Boring
For businesses:
Lower motivation = lower productivity
Process of production can breakdown if one is stage broken
Aims of the private sector: (3x) - ANSWER-- Survival
- Profit maximisation
- Growth
ADV and disADV of a Monopoly:
*Advantages (3x)
*Disadvantages (4x) - ANSWER-ADV of a monopoly:
-Innovation (Lots of profits to invest in R&D)
-Efficiency (natural monopolies are more efficent)
-Economies of scales
Dis-ADV of a monopoly:
-Higher prices
-Restricted choice
-Lack of innovation (No need to innovate)
-Inefficiency (No incentive to keep costs down for competition)
ADV and disADV of a Oligopoly:
*Advantages (5x)
*Disadvantages (1x) - ANSWER-ADV of a Oligopoly:
-Choice
-Quality
-Economies of scale
-Innovation
-Price wars
Dis-ADV of a Oligopoly:
- Collusion
ADV and disADV of being a large firm:
*Advantages (3x)
*Disadvantages (3x) - ANSWER-Advantages:
-Economies of scale
-Market domination (Higher profile in the public eye)
-Large-scale contracts (Small firms wouldnt be able to compete with large firms for a
contract for infrastructure projects)
Disadvantages:
-Too bureaucratic (Decision making can be slow)
-Coordination and control (Need for more supervision)
-Poor motivation (Workers feel alienated)
ADV and disADV of being a small firm:
*Advantages (5x)
*Disadvantages (4x) - ANSWER-Advantages:
-Flexibility (Easy to make decisions)
, -Personal service
-Lower wage costs (Do not belong to trade unions so can pay minimum wage)
-Better communication (Faster communication)
-Innovation (Face pressure to innovate because otherwise they will lose market share)
Disadvantages:
-Higher costs (Cannot exploit economies of scale)
-Lack of finance
-Difficult attracting quality staff
-Vulnerability (difficult to survive in times of harship)
ADV and disADV of competition to firms and consumers? - ANSWER-To firms:
- Operating efficiently to cut costs (Maybe less profits)
- Increase costs in R&D
To consumers:
- Lower prices -> ADV
- More choice -> ADV
- Better quality -> ADV
- Market uncertainty (Unprofitable firms cannot compete and may leave the market with
is consumer inconvenience)
- Lack of innovation (Cut costs = Less profit = Less innovation
Advantages and Disadvantages of 'division of labour'
- Labour
- Businesses - ANSWER-ADVANTAGES
For labour:
More skilled and more employable for the future
More skilled = Higher wages
For businesses:
Improvement in efficiency (Output per person)
Production time is reduced
Learning by doing
-----------------------------------------------------------
DISADVANTAGES
For labour:
Lower motivation = Boring
For businesses:
Lower motivation = lower productivity
Process of production can breakdown if one is stage broken
Aims of the private sector: (3x) - ANSWER-- Survival
- Profit maximisation
- Growth
