Economics 0455 · IGCSE · Firms’ costs, revenue and objectives
Firms’ costs, revenue and objectives — practice question
A change in the supply of enterprise can lead to the creation of new firms. In 2016, a theme park in Hong Kong recorded a loss as visitor numbers fell by 9%. In 2017, the same public limited company opened another, larger theme park in Shanghai. The new theme park is expected to gain from both internal and external economies of scale.
(a)[2]
Define what a loss means.
(b)[4]
Explain, giving examples, how an internal economy of scale differs from an external economy of scale.
(c)[6]
Analyse how a government might raise the supply of enterprise.
(d)[8]
Discuss whether consumers would, or would not, gain if a firm changed from a public limited company into a public corporation (state-owned enterprise).
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Revenue is lower than costs” …