Edexcel IGCSE Economics 1.2.4.d reasons firms stay small
Practise stay-small questions by defining niche markets and applying owner aims, finance limits or market size to small firms.
- Syllabus
- First assessment 2019
- Course
- Economics 4EC1
Exam points
- Explain why niche demand or limited market size can make staying small rational.
- Apply lack of finance or entrepreneur aims to a named small-business context.
- Define a niche market and recognise customised output as specialisation.
1.2.4.d Reasons firms stay small question 1
[Maximum number: 6]
Despite his success, Robert has decided to keep his business small and not expand.
With reference to the data in 'Small but successful' and your knowledge of economics, analyse why Robert might have decided not to expand his business.
AO2 and AO3
- Robert may have decided it could be too time consuming and difficult to obtain additional finance in order to expand
- Robert is operating in a niche market, meaning he can specialise in the requirements of his customers rather than mass production
- As the door signs and gifts are made to order, and to the requirements of the customer, Robert prefers to stay small and focus on their individual needs
- Robert is an entrepreneur and may have different aims to the more typical profit maximisation of some firms
- He may feel that working from home, providing a high quality specialised customer service is more important
- The size of the market for speciality carvings may not warrant expansion
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-2
- Demonstrates basic knowledge and understanding by developing relevant points. Limited application of economic terms, concepts, theories and calculations (AO2).
- Information presented will lack selectivity and organisation. Interpretation of economic information will be limited, with a lack of analysis of issues (AO3).
Level 2
3-4
- Demonstrates partial knowledge and understanding by developing relevant points. Partial application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate some selectivity and organisation. Interpretation of economic information will be good, with some analysis of issues (AO3).
Level 3
5-6
- Demonstrates clear knowledge and understanding by developing relevant points. Appropriate application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate excellent selectivity and organisation. Interpretation of economic information will be excellent, with a thorough analysis of issues (AO3).
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