Business 0450 · IGCSE · Production of goods and services
Production of goods and services — practice question
CGM produces high-quality shoes through job production. This production method relies on specialisation. CGM sells in a niche market. The managers at CGM recognise that every business activity generates external costs, so they always try to behave in ways that safeguard the environment. The Operations Director aims to raise profit. CGM could either purchase cheaper raw materials or bring new technology into the production process. The new technology would cost $30 000 and might cut the workforce from 30 to 26.
(a)[2]
Identify two benefits of specialisation.
(b)[2]
What does the term ‘external cost’ mean?
(c)[4]
Identify and explain two actions CGM could take in order to protect the environment.
(d)[6]
Identify and explain one benefit and one drawback to CGM of using job production.
(e)[6]
Should CGM introduce new technology into the production process? 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: “Greater output or faster production or increased productivity” …