Economics Paper 2, Nov/Dec. 2012  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Commsents
Question 10


(a)        What are external economies of scale?                                  
            (b)        Describe any four external economies of scale.                                 
            (c)        State any three limitations to the growth of firms.                            


This question was unpopular with the candidates.  Most of the candidates did not attempt this question.  However, those who attempted it scored below average marks because they failed to give the following answers:

(a)        External economies of scale are cost saving benefits enjoyed when firms in the same or similar industries are  concentrated in a particular area.

            (b)        (i)         pool of skilled workers;
                        (ii)        joint services;
(iii)       training schools;
(iv)       joint research;
(v)        existence of subsidiary firms.

            (c)        (i)         extent of market;
                        (ii)        nature of the business;

  1. inadequate capital;
  2. level of entrepreneurial skill.
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