IGCSE Economics Paper-2: Specimen Questions with Answers 67 - 68 of 100

Passage

As a result of the government strategy, public sector had come to occupy a monopoly of dominant position in basic and heavy industries.

Question 67 (1 of 5 Based on Passage)

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Short Answer▾

What are the objectives of Public company?

Explanation

The public enterprise which were promoted as an instrument for implementation of the government՚s socio-economic policies had a multitude of objectives set for them:

  • To help in the rapid economic growth and industrialization of the country and create the necessary infrastructure for economic development.
  • To earn return on investment and thus generate resources of development.
  • To promote balanced regional development
  • To create employment opportunities.
  • To promote redistribution of wealth and income
  • To promote import substitution, save and earn foreign exchange for the economy.
Exchange for the Economy

Question 68 (2 of 5 Based on Passage)

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Short Answer▾

Explain the reason why some firms remain small.

Explanation

Reasons for Firms to Remain Small Are

  • Avoidance of diseconomies of scale: Growth may not be the sole objective of the firm. Growth has some negative impacts on a business. Example, when a business grows it is going to face communication problems due to the increase in the hierarchy of business structure and its span of control.
  • Operation in niche markets: Due to operation in the niche markets some business may not have enough demand for its products and services that they sell in market for the product to grow and earn profits.
  • Entry Barriers: Barriers to entry into the market may be difficult for the firms to expand and grow in the market. For example, large business dominates the market that has low cost of operation due to which they would not be able to offer competitive prices to enter the market.
  • Small selling point: Selling point of some business may be small. For example, a retail shop which is small may provide better services to customer than the big ones. Due to which they want to keep their size small.

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