Economics 0455 · IGCSE · Firms’ costs, revenue and objectives
Firms’ costs, revenue and objectives — practice question
In 2014, the share price of a major UK supermarket company dropped on the London Stock Exchange after it announced that profits were expected to decline. Stronger competition from German supermarket firms led the UK supermarket to look at several ways of lowering costs, such as cutting some workers’ wage rates and lengthening some workers’ working hours.
(a)[2]
Define the term ‘stock exchange’.
(b)[4]
Explain why survival can be a short-term objective for some firms.
(c)[6]
Analyse how consumers might be harmed if the profits firms earn fall.
(d)[8]
Discuss whether a fall in wage rates together with a rise in working hours will always cut the supply of workers to a firm.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A market or organisation used for buying and selling shares” …