Business 0450 · IGCSE · Production of goods and services
Production of goods and services — practice question
EGT makes a wide range of teas in different flavours. It operates batch production. The tea leaves, which are the chief raw materials, are supplied by local farmers. Because factory space is restricted, EGT cannot run an automated production line. The factory’s ageing machines frequently stop working. One employee handles quality control. EGT does not gain from economies of scale. The Human Resources manager recognises that poor motivation is an issue among its 80 employees. She intends to apply her understanding of Maslow’s hierarchy of needs to raise motivation. The owners want output to rise, but they cannot afford to relocate EGT to another site.
(a)[2]
What is meant by the term ‘economies of scale’?
(b)[2]
What is meant by the term ‘quality control’?
(c)[4]
Identify and explain two reasons why EGT chooses batch production.
(d)[6]
Identify and explain two ways the Human Resources manager could draw on her knowledge of Maslow’s hierarchy of needs to motivate employees.
(e)[6]
Recommend the best method, apart from improving motivation, that EGT could use to raise its output level. Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Reasons why average or unit cost falls as a business grows larger” …