2.1

Question 1

what is progressive tax

Answer 1

the more you earn the more your taxed

Question 2

what is regressive tax

Answer 2

the more you earn the less your taxed

Question 3

proportional tax

Answer 3

marginal rate of tax is constant leading to constant average rate of tax

Question 4

what is organic growth

Answer 4

growth happens naturally over time and its within the business means

Question 5

what is external growth

Answer 5

growth happens very quickly and outside a business’s means

Question 6

how do firms grow

Answer 6

mergers

takeover (acquisition)

Question 7

why might a firm want to grow

Answer 7

maximise profit
meet demands
opportunity to cists cost
increase market share
economies of scale

Question 8

what is internal economies of scale

Answer 8

an increase in scale of production

Question 9

what is external economies of scale

Answer 9

increase in scale of production within the industry the firms operates in

Question 10

what are the 6 internal economies of scale and what does each one mean

Answer 10

technical - benefit of containerization
purchasing - buy in bulk
managerial - specialised staff
financial- lower interest rates on loans
risk bearing - diversification
network - build network of suppliers/consumers

Question 11

what is diseconomies of scale

Answer 11

occur when there is an increase in average total cost as the scale of production increases

Question 12

how can diseconomies happen

Answer 12

Internal communication
Coordination

Question 13

what is market power

Answer 13

the extent to which a firm can control price and costs in a market.

Question 14

what is benefit of having high market power

Answer 14

able to charge high prices force

suppliers to lower prices by threatening to cancel contracts

lack of competition

economies of scale

ability to use high levels of finance

Question 15

what are the 2 types of branding and what do they mean

Answer 15

personal - when a person brands themselves e.g celebrities

geographical - when a city ,country, region or county creates a brand that is the perfect example of the people there e.g tourism

Question 16

what is brand recognition

Answer 16

a brand is known for their logo, shape or colour e.g nike tick

Question 17

what are the benefits of a strong brand

Answer 17

high brand loyalty
added value
reduce PED
charge premium prices
distinguish competition

Question 18

what are the drawbacks of a strong brand

Answer 18

skilled labour shortage
geographical immobility
occupational immobility

Question 19

what is geographical immobility

Answer 19

workers in an economy find it difficult to move regions

Question 20

what is occupational immobility

Answer 20

workers don’t possess skills to do other jobs

Question 21

what is integration

Answer 21

the bringing of 2 or more firms together

Question 22

what is vertical integration

Answer 22

occurs when 2 firms in different stages of production integrate e.g car manufacturer buys a dealership

Question 23

what is horizontal integration

Answer 23

2 firms at the same stage of production integrate e.g mercedes buying out bmw

Question 24

what is conglomerate integration

Answer 24

occurs when 2 firms who ate unrelated integration e.g car manufacturer buys a book store

Question 25

what are the reasons for inorganic growth

Answer 25

Synergy secure supplier secure outlet brand recognition expertise

Question 26

What is innovation

Answer 26

the development of an idea into a new product or process

Question 27

what is he purpose of innovation

Answer 27

Firms cannot afford to stand still in competitive market so they must find new ways to be ahead of rivals

Question 28

what are the risks of innovation

Answer 28

Firms can make substantial losses if innovation fails and other companies are likely to react with their own innovations

Question 29

benefits of innovation

Answer 29

Creates a USP patent reduces competition More efficient and cost effective production process Likely to be a premium product with high prices

Question 30

Drawbacks of innovation

Answer 30

Can be very costly drain on resources opportunity cost arise Few innovations succeed effectively financing waste

Question 31

what is differentiation

Answer 31

being able to offer a product or service that stands out from the competition

Question 32

how can a firm differentiate

Answer 32

promotion innovation product

Question 33

what is product innovation

Answer 33

changing a product that already exists or developing an invention into a brand new product

Question 34

what is process innovation

Answer 34

changing a process of production that already exists or putting into practise a brand new production process

Question 35

what is the role of state funding

Answer 35

States provide finance to firms which innovate to invest in R&D in hopes to differentiate industries in the UK

Question 36

What are the stages in the product life cycle

Answer 36

Research and development introduction growth maturity decline Extension strategies

Question 37

What is the digital economy

Answer 37

the use of any form of digital technology

Question 38

what is the 3 things in market side of the digital economy

Answer 38

price comparison websites - consumers compare prices increasing competition viral marketing - Use of social media to encourage the spread of promotional activities and increase brand awareness social media -The use of virtual communities to communicate with actual and potential customers