Economics 0455 · IGCSE · Firms’ costs, revenue and objectives
Firms’ costs, revenue and objectives — practice question
In 2020, Australia had a comparatively high national minimum wage (NMW). Some workers on Australian dairy farms received the NMW. Australia produces milk and soft drinks. Some consumers buy milk as a substitute for soft drinks. In 2020, a number of dairy farms and small firms closed down. That year also brought a rise in the value of the country’s floating foreign exchange rate.
(a)[2]
Identify two reasons why a government might introduce an NMW.
(b)[4]
Explain two causes of a rise in the value of a country’s floating foreign exchange rate.
(c)[6]
Analyse how a rise in the price of milk may affect the revenue received by milk producers and soft drinks producers.
(d)[8]
Discuss whether or not small firms are more likely to cease trading than large firms.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Increase wages or living standards” …