Practise Cambridge IGCSE Economics by explaining competitive-market effects on prices, choice and quality and evaluating changes in the number of firms.
A Swiss multinational food manufacturer increased prices for its products by an average of 8% in 2022. It increased its prices in the USA by 11.6%. This multinational company (MNC) is one of the world's oldest MNCs. It started as a small firm but has grown over the last 160 years. Over this period, its decisions have always been influenced by opportunity cost.
Discuss whether or not consumers would benefit from an increase in the number of small firms in an industry.
In assessing each answer, use the table opposite.
Why they might:
- more competition, lower price, higher quality
- small firms may provide a more personal service
- may produce niche products
- may be more flexible / react quickly to consumer needs
- may introduce new ideas / new varieties of products
- may be easier access - consumers may not have to travel so far.
Why they might not:
- may be wasteful duplication
- may waste consumers time with too much information to process
- may have higher costs as unable to take advantage of economies of scale
- may reduce profits of larger firms, reducing their spending on research and development
- may not stay in business for long.
8
Level
3
0
A mark of zero should be awarded for no
creditable content.
\end{tabular}
L1 and up to 2 marks for an understanding of consumers, small firms or industry.
\end{tabular}}