IBDP Economics Question Analysis Topic: Economics - Short Questions
Exam Questions:
1) A good which is free-of-charge is a free good. Do you agree? Explain.
2) A telecommunication service provider starts a credit company which offers loans to the public.
(a) Explain what type of expansion this is.
(b) List THREE possible motives for the above expansion.
Answer:
For IBDP Economics, you should know:
1) No, because the product might be made from limited resources that have other purposes.
2)
(a) As it is the company's expansion into other industries, it is a conglomerate expansion.
(b) Possible reasons include diversifying income and products to spread risk, using the brand name of one product in others, and sharing resources with another company to make better use of resources. Additionally, it could've been done to benefit from economies of scale, as well as being able to spread costs over a larger quantity of output.
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