Share Economics SA2 Paper 2 Review
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Identify three types of private sector firms
sole trader, partnership,private limited company, public limited company.
Explain two advantages of small firms
Few legal formalities exist, know their customers on a more personal level, Smaller firms are easier to manage and control.
Identify two examples of tertiary sector firms.
retail shop, schools, advertising agencies, hairdressers
Explain two disadvantages of and challenges facing small firms.
small firms have limited start-up capital, small firms have the largest risk of business failure
Explain two ways in which a monopoly differs from perfect competition
many firms in perfect competition but only one in monopoly, perfect information in perfect competition but not monopoly.
State two functions of money
medium of exchange, measure of value (unit of account) and standard of deferred payments.
Explain two advantages banknotes have as a form of money.
Generally acceptable, Portable, Divisible, Recognisable, Limited in supply, Homogeneous
Analyse the influences on the mobility of workers.
Occupational mobility is influenced by education and training, Geographical mobility is influenced by the price/availability of housing and family ties
Discuss whether or not a central bank should raise the rate of interest.
yes, to reduce borrowing if people and firms are building up unsustainable debt. No, it may reduce the economic growth rate as it may discourage investment.
Define wage rates.
The amount of money paid to a worker per unit of time in exchange for their labour
Explain why some firms may have survival as a short-term goal.
Some firms may be making a loss/be in financial difficulties they may hope to continue to produce until demand increases in the future and so revenue rises
Analyse how consumers may suffer as a result of a fall in the profits firms earn.
Some firms may decide to stop production, this may reduce competition, raise price, lower quality and reduce choice.
Discuss whether a decrease in wage rates and an increase in working hours will always reduce the supply of workers to a firm.
Wage rates are a key influence on the supply of workers, a decrease in wages would reduce the financial return from working, workers may decide to switch jobs.
Discuss whether a decrease in wage rates and an increase in working hours will always reduce the supply of workers to a firm.
Workers may stay in the job if working conditions are good, there are long holidays, good promotion chances, good pensions and good fringe benefits.
Define ‘a standard for deferred payments’.
A function of money that enables people to borrow, pay back at a later date and to lend.
Explain two reasons why agricultural workers may be paid less than manufacturing workers.
may be in higher supply as work may require fewer qualifications/less skill, may have less bargaining power as they may not belong to a trade union
