|
Questions on Profile Two (Part 4)
Yvonne
Harvey, Contributor
 |
| Students
view the get ready for work career
and education Expo at the Hilton
Kingston Hotel on June 1, 2005.
- Junior Dowie Photo |
HELLO
FRIENDS. Are you ready for some more
practice in answering questions on profile
two? I hope so. The question for today
is taken from CXC past paper, January
2001, General Proficiency, Question
6. This question is based on economies
and diseconomies of scale and mechanisation.
The question: Company
XYZ Ltd. manufactures and markets a
range of candles of different shapes
and lengths. Since its incorporation
in 1989, sales volume has increased
tenfold. In order to meet demand, the
company has had to expand its production
capacity and support systems considerably.
(a)
List FOUR internal economies of scale
the company might experience. (4
marks)
(b)
Identify FOUR diseconomies of scale
the company might experience. (4
marks)
Expansion
has invariably led to increased mechanisation
of various aspects of a business.
(c)
(i) Explain FOUR benefits the company
might experience because of mechanisation.
(8 marks)
(ii)
Discuss TWO negative effects the introduction
of mechanisation might have on the
company. (4 marks)
Total:
20 marks
DISCUSSION
AND GUIDELINES ANSWER
(a)
You will remember that economies of
scale refers to advantage to a firm
or company from going into large-scale
production. The economies of scale
include:
-
Technical economies/economies in
the use of factors of production.
- Managerial
economies/economies in administration.
-
Research and development economies.
- Financial
economies.
- Marketing
economies/commercial economies.
- Social
economies.
- Risk-bearing
economies etc.
Any
FOUR economies or advantage may be
listed.
(b)
Diseconomies of scale refers to the
disadvantages to a firm or company
from large-scale production. The diseconomies
include:
Increased costs, e.g. increased marketing
and financial costs.
'Red tape', which is the elaborate
and time-consuming procedures through
which consumers must pass.
Changing techniques of production
may cause expensive machinery to lay
idle.
Larger businesses often result in
loss of coordination and lack of control,
e.g. communication between management
and workers may slow down, wastages
of factors, etc.
Any
FOUR diseconomies or disadvantages
may be listed.
(c)
(i) Recall that mechanisation means
partially replacing human or animal
muscle power by a machine, e.g., a
tailor buying a sewing machine instead
of sewing by hand. The benefits of
mechanisation include:
Output increases because work is speeded
up and more can be produced in less
time.
Fewer workers are needed as machines
can do the work of a number of persons.
Costs are saved. These costs that
are saved can be transferred to the
market in the form of lower prices
to consumers.
The quality of output often increases.
It encourages more skilled workers
to enter the workforce, i.e., workers
who can operate specific machinery
etc.
Any
FOUR benefits can be explained. For
full marks, the benefits must be brought
out clearly.
(ii)
The negative effects of the introduction
of mechanisation on the company might
include:
Unemployment caused by the fact that
less labour is required than when
work is done entirely by hand, therefore,
the excess labour is normally laid
off.
Some machines are of a technical nature
and require skilled persons to operate
them. In some cases these skilled
persons are hard to find.
When machines are out of service,
overhead cost increase.
Machines may be costly to maintain,
as in some cases parts may have to
be imported with the use of scarce
foreign exchange.
As
in (c) (i) above, the negative effects
of mechanisation must be properly
discussed in order to gain full marks.
Next
week I will begin discussions and
guideline answers on questions from
Profile Three - Finance and Introduction
to Economics. The first question will
be taken from the January 2001 CXC
past paper, General, Question 8. See
you.
*
Yvonne Harvey teaches at Glenmuir
High School.
|
