Unit 1 Questions Flashcards
How can a firm raise its sales?
Promote products more
Cut prices
Improve distribution
Why can a firm’s sales be lower than expected?
Actions by competitors
Poor marketing
Changes in the external enviroment e.g. the economy
Factors which might influence the location of a business
Costs
Where the customers are
Availability of labour
How can a government influence a firm’s location?
Offering subsidies or tax cuts
Controlling planning permission
A benefit of economies of scale
The firm can reduce or maintain prices and benefit from higher profit margins
Problems of diseconomies of scale
May have to raise prices
Profit margins may fall
How do you change the scale of production?
Purchasing new equipment, finishing new facilities, recruiting new staff
A benefit of division of labour
Employees may become more productive via repetition
A problem of division of labour
May lead to boredom and people leaving the business
Benefits of being a sole trader
Fast decision making
Keep all the rewards
Disadvantages of being a sole trader
Unlimited liability
Have to make all the decisions alone
Problems in setting up a business as a sole trader
Getting the finance
Choosing a suitable location
May take time to build up customers
Why do diseconomies of scale occur?
Problems controlling and coordinating a business
Enployees may be de-motivated as they don’t feel part of a large business
Why might supply of products rise?
More firms in the market
New technology
Dangers of a free market economy
Firms can exploit consumers
Some goods may not be provided
Large firms may dominate markets
