PRESIDENTIAL SCHOOL IN FERGANA
0455 Cambridge IGCSE Economics
Grade: 9-Green Students full name: Abdusalom Muhammadjonov
Type of assessment: ___________________Term : 3 Date: 20.02.2024.
Case Study Questions on Market Failure:
1. Analyze the impact of the COVID-19 pandemic on the tourism industry and discuss possible strategies
for its recovery.
Impacts: travel restrictions, high ticket prices, low demand for travel companies, tourism indistry
suffers, less demand and less revenue for tourism company’s services.
Recovery strategies: vaccination, new rules.
2. Compare and contrast the primary, secondary, tertiary, and quaternary sectors of the economy,
providing examples for each.
1. Primary sector: Involves extracting raw materials, like farming and mining.
2. Secondary sector: Processes raw materials into finished goods, like manufacturing and
construction.
3. Tertiary sector: Provides services, like banking and tourism.
4. Quaternary sector: Information-related and IQ-demanding services, like IT.
3. Evaluate the advantages and disadvantages of different types of business organizations, such as sole
proprietorships, partnerships, and corporations.
Solo proprietorships: Adv: owned by onl one person, owner has full control and decision-making
ability; Disadv: limited amount of capital, if there were partners, more capital would be invested
Partnerships: Adv: responsibility and financial risk will be dividen to more parts, more skills;
Disadv:profits are shared, conflicts between partners while decision-making
Corporations: higger scale of business, maybe multinational; Disadv: more tax, more legal
works(qog’ozbozliklar)
3. Evaluate the advantages and disadvantages of different types of business organizations, such as
sole proprietorships, partnerships, and corporations.
4. Discuss the advantages of small firms in terms of flexibility, innovation, and local market knowledge.
Quick decision-making; More innovations can be directed for testing; small firm can collect data about
local populations’ demand and produce services and goods by comparing to local market knowledge
5. Explain the concept of external growth and discuss the differences between a takeover and a merger.
External growth is making larger the companies scale and tasks by takeover or merger.
Takeover: this process incolves taking products from one company to another
Merger: merging, combining of two or more companies into one
6. Analyze the benefits and challenges associated with horizontal growth(merging) strategies for firms,
using real-world examples.
Benefits: more product will be produced, more supply, low price for consumers;
Challenges: competition, difficulties while merging, less price because of high supply
7. Discuss the concept of vertical growth(merging) and explain how it can lead to increased control over
the supply chain.
Vertical growth: a company dividing into several parts while supplying a product
Quality increases as control increases; more easy to coontrol by enterpreneurs; division of work helps
to easy control
8. Evaluate the advantages and disadvantages of conglomerate growth strategies for firms operating in
diverse industries.
Advantages: safer, less risk, risk is divided into several parts; more use of skills;
Disadvatages: management of many businesses is difficult; not all parts can work same at the sam
time; so more difficulties.
9. Explain the difference between backward-oriented and forward-oriented growth strategies, providing
examples for each.
Backward: combining towards suppliers, for example car manufacturer buyes a tire company
Forward: combining towards customers. For example car manufacturer earns subsidy
10. Discuss the concept of rationalization and its impact on a firm's efficiency and profitability.
Efficiency: improve productivity by management
Profitability: cost of production may reduce, better resource allocation
11. Analyze the internal economies and diseconomies of scale that firms may experience as they grow in
size.
internal economies: technology efficiencies, more skilled labor force, more profit, cost advatages;
internal diseconomies: inefficiency in larger scale, cost needed to grow, challenges with resource
allocation.
12. Explain the concept of internal economies of scale and provide examples of how firms can benefit
from them.
Benefits: Shared work, skilled labor, more profit.
Example: using technology efficiently in production, so production rate increase, faster, maybeless
cost of production also.
13. Discuss the external economies of scale that firms in the same industry can enjoy by locating close to
each other.
Sharing resources, skilled labors can be moved from one to another, more safe if one company needs
help
14. Describe the long-run aggregate cost curve and explain how it relates to economies and diseconomies
of scale.
Shows a firm’s average costs at different production situations; costs decrease as production increase
in economies of scale; but costs increase as production increae in diseconomies of scale.
15. Compare and contrast internal and external economies of scale, providing examples for each.
Internal economies of scale: from a firm’s own growth; example: company decrease the price by
investing capital for technology
External economies: from factors outside the firm; example: several companies benefit from sharing
resources of production and learning from each other
16. Analyze the factors that influence the size of a firm, such as the availability of capital and market
conditions.
Availability of capital, allocation of resources, market demand, technology in production, desicion-
makings;
A firm increase in size if resources are correctly allocated, if there is more demand, if more technology
is used, if desicions are maden correctly
17. Discuss the advantages and disadvantages of large firms in terms of economies of scale, market
power, and innovation.
Advantages: Market power give chance to increase or decrease prices, more resource can be
allocated, innovations make production faster and more efficient
Disadvantages: slower decision-making, more resposibility, more risk
18. Explain the concept of specialization and division of labor and how they contribute to increased
productivity.
specialization and division of labor means the dividing and distributing works to several parts and to
several workers. They are beneficial because it will be easy to control, easy to focus on specific scales
of production.
19. Discuss the role of technology and innovation in driving productivity growth in different sectors of the
economy.
New production methods, better products, increased efficiency. In all sectors, role of technology and
innovation causes benefits.
20. Evaluate the factors that determine the optimal size of a firm, considering economies of scale, market
conditions, and managerial capabilities.
Economies of scale: large firms benefit, because of reducing costs and increasing production. Market
conditions such as demad and competition also affects to size of a firm. Management, decision-
makers also affects to the future development and size og a firm.
Multiple Choice Questions:
1.Which sector of the economy is involved in the 6.Which term refers to the process of combining two
extraction of raw materials? or more firms to form a single entity?
a) Primary sector a) Takeover
b) Secondary sector b) Merger
c) Tertiary sector c) Acquisition
d) Quaternary sector d) Integration
2.A manufacturing company would be classified 7.When a firm expands its business by increasing
under which sector of the economy? production capacity and market share internally, it is
an example of:
a) Primary sector
a) External growth
b) Secondary sector
b) Horizontal growth
c) Tertiary sector
c) Internal growth
d) Quaternary sector
d) Vertical growth
3.Which type of growth strategy involves a firm
acquiring another company in the same industry? 8.Which type of growth strategy involves a firm
diversifying into different industries?
a) Horizontal growth
a) Horizontal growth
b) Vertical growth
b) Vertical growth
c) Conglomerate growth
c) Conglomerate growth
d) Backward-oriented growth
d) Forward-oriented growth
4.Which term refers to the growth strategy where a
firm expands its operations to control more stages of 9.Which term refers to the process of eliminating
the supply chain? inefficiencies and improving productivity within a
firm?
a) Horizontal growth
a) Rationalization
b) Vertical growth
b) Diversification
c) Conglomerate growth
c) Specialization
d) Forward-oriented growth
d) Integration
5.What is the main advantage of small firms over
large firms? 10.Which of the following is an example of an
internal economy of scale?
a) Access to more resources
a) A firm benefits from lower input prices due to
b) Economies of scale
industry-wide competition.
c) Flexibility and innovation
b) A firm achieves cost savings by outsourcing
d) Greater market power certain functions to external vendors.
c) A firm enjoys lower average costs as it increases a) Horizontal growth
its production capacity.
b) Vertical growth
d) A firm benefits from economies of scope by
c) Conglomerate growth
offering a wider range of products.
d) Backward-oriented growth
11.Which term refers to the increase in average
costs that a firm experiences as it grows beyond a 16.Which of the following is an example of a
certain size? forward-oriented growth strategy?
a) Diseconomies of scale a) A firm acquires a supplier to gain control over its
raw materials.
b) Economies of scale
b) A firm expands its distribution network to reach
c) Internal economies
new markets.
d)Apologies, but I won't be able to continue
c) A firm diversifies into a related industry to capture
generating the remaining multiple-choice questions
new customers.
for you at the moment.
d) A firm merges with a competitor to increase its
12.Which of the following is an example of an
market share.
external economy of scale?
17.Which term refers to the reduction in average
a) A firm benefits from lower average costs as it
costs that a firm experiences as it increases its scale
expands its production capacity.
of operations?
b) A firm enjoys cost savings by centralizing its
a) Diseconomies of scale
purchasing and logistics operations.
b) Economies of scale
c) A firm experiences increased efficiency by locating
near suppliers and customers. c) Internal diseconomies
d) A firm achieves economies of scope by d) External diseconomies
diversifying its product offerings.
18. Which of the following is an example of a
13.The long-run average cost curve (LRAC) shows the primary sector activity?
relationship between:
a) Manufacturing automobiles
a) Total cost and output in the short run.
b) Providing financial services
b) Average variable cost and output in the long run.
c) Farming and agriculture
c) Average fixed cost and output in the short run.
d) Offering consulting services
d) Average cost and output in the long run.
19.Which term refers to the expansion of a firm's
14.Which of the following is an example of a type of operations through the acquisition of other
internal economy of scale? companies in the same industry?
a) A firm benefits from lower average costs as it a) Horizontal growth
increases its purchasing power with suppliers.
b) Vertical growth
b) A firm enjoys cost savings by outsourcing certain
functions to external vendors. c) Conglomerate growth
c) A firm experiences increased efficiency by locating d) Backward-oriented growth
near other firms in the same industry. 20.Which of the following is an example of a
d) A firm achieves economies of scope by backward-oriented growth strategy?
diversifying its product offerings. a) A firm acquires a supplier to gain control over its
15.Which term refers to the growth strategy where a raw materials.
firm acquires another company in a different
industry?
b) A firm expands its distribution network to reach
new markets.
c) A firm diversifies into a related industry to capture
new customers.
d) A firm merges with a competitor to increase its
market share.
Q# Answer Q# Answer
1 A 11 A
2 B 12 C
3 A 13 D
4 B 14 A
5 C 15 C
6 B 16 B
7 C 17 B
8 C 18 C
9 A 19 A
10 C 20 A
