IGCSE Economics Paper-2: Specimen Questions with Answers 56 - 57 of 100

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Passage

The cost of production of a firm decreases as the business expands.

Question 56 (5 of 5 Based on Passage)

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Short Answer▾

Differentiate between internal and external economies of scale.

Explanation

Internal Economies and External Economies
S. No.Internal EconomiesExternal Economies
1.Internal economies refer to the expansion of the firm itself.External economies refer to the expansion of the industry.
2.Internal economies help in lowering the cost of production.External economies benefit most or all the companies.
3.The range of economies is such as economic, technical, financial, etc.External economies help in explaining the reason behind the growth of the economy.
4.Efficiencies from the larger scale of production in a firm.Agglomeration economies are equally important.

Passage

Managers today, regard buying of a company as an access into the market.

Question 57 (1 of 5 Based on Passage)

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Short Answer▾

From the above statement what do you understand by business integration?

Explanation

Business integration means when two business are combined through merger or takeover. The nature and type of integration can be defined based on the activities of each business. The different types of integration are:

  • Forward
  • Backward
  • Horizontal
  • Vertical
Integration is Strategy
  • Integration is strategy to accomplish the goals and objectives of business through synchronization of information and technology. It helps in the growth of company which can be achieved by adding new functions into practice.

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