Business 7115 · O Level · Business and the international economy
Business and the international economy — practice question
KLG operates in country X. It makes electrical parts and sells them to washing machine manufacturers in country X. The Managing Director intends to move to country Y, which is a low-cost country. She said: ‘This will let us pay employees low wages for long hours because there are few legal controls on employment and health and safety. KLG cannot be both ethical and profitable. Changes in exchange rates and import tariffs may create problems once we start exporting.’
(a)[2]
What does ‘import tariff’ mean?
(b)[2]
Identify two benefits that specialisation could bring to KLG.
(c)[4]
Explain how a change in exchange rates could affect KLG when it exports.
(d)[6]
Identify and explain two factors, apart from exchange rates and import tariffs, that KLG should take into account when choosing a relocation site.
(e)[6]
The Managing Director argues that ‘KLG cannot be both ethical and profitable’. Do you agree? 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: “A tax levied on goods brought into a country” …