BUSINESS ECONOMICS 9TH DECEMBER 2012 Examination Paper

Answer any FIVE (5) questions. Clearly cross out surplus answers.

Time: 3 hours
Any reference material brought into the examination room must be handed to the invigilator before the start of the examination.

ANSWER ANY FIVE (5) QUESTIONS

QUESTION 1 a) What are the main stages of model building? Marks 4 6

b) Assess the extent to which economic models or theories can be of value in helping to make business decisions. c) i) ii) Draw the Boston Consultancy Group (BCG) matrix.

Discuss what objectives a firm might be expected to pursue for each of the following products: 6 Cash Cow and Dog. Total 20 Marks

QUESTION 2 a) Explain what is meant by bounded rationality and why it occurs. 4 4

b) Discuss what is meant by opportunism and explain why it is less of a problem in competitive markets than it is in uncompetitive markets. c) State the main features of Obligational Contractual Relationships.

d) Why might Obligational Contractual Relationships be an appropriate response to problems caused by 3 bounded rationality and opportunism? Total 20 Marks QUESTION 3 a) Define the following types of merger or acquisition and discuss the benefits that are believed to flow from each. i) Horizontal integration. ii) iii) b) i) ii) iii) Vertical integration. Conglomerate merger. Define the term multinational corporation. Explain the typical behaviour shown by market oriented multinational corporations. Define globalisation.

5 5 3 2 3 2

Total 20 Marks QUESTION 4 a) What are the five forces used by Porter to analyse competitive structure? Using an appropriate example, define what is meant by a substitute product in Porters model. 5 4 6

b) i)

ii) Identify and explain the factors that Porters model sees as influencing the threat of substitution. c) What are the main issues and problems that arise in the use of Porters five forces model?

5 Total 20 Marks

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Business Economics December 2012 Final NCC Education Ltd 2012

QUESTION 5 a) Identify what market surveys can be used for and discuss the main issues that arise in their use.

Marks 5 5

b) Identify the advantages and possible problems involved in using the opinions of the sales force to forecast the behaviour of buyers. c) i) Draw and label the product life cycle.

3 4

ii) What sort of pricing and marketing behaviour would typically occur at the early stage of the cycle? d) Explain the practice and potential benefits of successful market segmentation.

3 Total 20 Marks

QUESTION 6 a) i) Using an appropriate example, explain what negative externalities are. 3 3 6

ii) Explain why they may need to be controlled via some form of government regulation. b) Explain and expand upon the argument that privatisation generates supply side (efficiency or value for money) benefits. c) Explain the approach taken by price cap regulation to the regulation of privatised utilities.

4 4 Total 20 Marks

d) What are the main issues faced by price cap regulation?

END OF PAPER

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Business Economics December 2012 Final NCC Education Ltd 2012