Pearson Edexcel International A Level · Economics (YEC11)

Types and sizes of businesses: Practice Questions

5 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Types and sizes of businesses.

10 questions29 marksFree, no account

Question 1

1 mark

Which of the following is a characteristic of private sector organisations as a type of business?

Question 2

1 mark

A large multinational corporation pursues a strategy of conglomerate integration by acquiring a firm in a completely unrelated industry. Simultaneously, it faces a constraint on business growth due to owner objectives.

Which of the following best describes this scenario?

Question 3

1 mark

Which of the following is a characteristic of a public sector organisation?

Question 4

1 mark

A large multinational technology firm decides to grow by acquiring a software startup that develops specialized encryption tools used in its primary devices. Simultaneously, it merges with a competitor that produces similar smartphones to increase its market share.

Which types of business growth are described?

Question 5

1 mark

Which of the following is an example of organic growth for a business?

Question 6

4 marks

Explain the difference between organic growth and conglomerate integration as methods for business expansion.

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Question 7

5 marks

A large multinational manufacturing firm acquires a smaller supplier located at an earlier stage of the same production process. Explain the specific type of integration this represents and identify one possible constraint on business growth that could lead a firm to choose this method over organic expansion.

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Question 8

3 marks

Identify the specific type of business growth occurring when a firm acquires another company at the same stage of the production process in the same industry.

State one technical economy of scale the firm might achieve through this merger.

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Question 9

6 marks

A company that produces sports clothing decides to expand by acquiring a large cotton plantation that provides the raw materials for its fabrics. At the same time, it launches a new chain of retail stores to sell its products directly to consumers.

(a) Identify the two specific types of merger or integration described in this scenario. (2)
(b) Explain one potential benefit to the firm of pursuing the acquisition of the cotton plantation. (2)
(c) Using the concept of constraints on business growth, discuss why a lack of access to finance might prevent a small firm from pursuing similar integration strategies. (2)

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Question 10

6 marks

Analyze the following developments for a large multinational technology corporation:
i. The firm acquires a major glass manufacturing company that supplies screens for its devices.
ii. The firm expands into the electric vehicle market, a completely new sector for its operations.

(a) Identify the specific types of merger or integration described in cases (i) and (ii). (2)
(b) Explain one possible internal economy of scale that might result from the acquisition in case (i). (2)
(c) Discuss one potential constraint on business growth that this firm might face as it enters the electric vehicle market. (2)

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