Economic Issues Exam Solutions✍🏽
Ymix is a large cement company based in country X. Ymix is in the private sector. It supplies builders in country X with 20% of the cement they need and the rest is imported.
Ymix now has eight cement factories but plans to close two of them. This will threaten 2000 employees with redundancy.
The Managing Director said: ‘I blame the appreciation of country X’s exchange rate. The Government should help private sector businesses.’
(e) Do you think the government should help private sector businesses? Justify your answer. [6]
Yes, because it will protect jobs which help government meets an economic objective of decreasing unemployment.
No, because government support reduces incentives for private sector businesses to be successful. This could result in businesses being less efficient.
Government’s should only help start-ups in the private sector. It will be too costly to help all private sector businesses and will lead to dependence on government hand-outs and lower efficiency.
Environmental and Ethical Issues Solutions ✍🏽
WaWay, a large manufacturing business, makes cell (mobile) phones.
WaWay exports 30% of its products. It imports most of its raw materials to help reduce total costs.
All 400 of WaWay’s employees understand the importance of quality control.
The Operations Director has asked all suppliers to ensure they do not use child labour. She is also concerned that many governments are planning to increase import controls such as quotas.
(e) Do you think that large manufacturing businesses should be concerned about ethical issues such as child labour? Justify your answer. [6]
Yes, because being ethical may improve image, so more customers want to buy its products which may increase revenue.
No because being ethical may increase costs, for example if they have to pay the 400 employees higher wages this will increase labour costs. Although short-term profits may fall, if customers of a large cell phone manufacturer find out they don’t treat workers fairly this could lead to a large decrease on sales and profits.
Business and the International Economy Solutions ✍🏽
Ymix is a large cement company based in country X. Ymix is in the private sector. It supplies builders in country X with 20% of the cement they need and the rest is imported.
Ymix now has eight cement factories but plans to close two of them. This will threaten 2000 employees with redundancy. The Managing Director said: ‘I blame the appreciation of country X’s exchange rate. The Government should help private sector businesses.’
(c) Outline how the appreciation of country B’s exchange rate might affect Ymix. [4]
Imported products become cheaper, so less builders will buy cement.
Workers at Ymix will be made redundant as Ymix may have to close some of its 8 factories.
