Types of Integration

A milk processing company takes over a group of dairy farms before merging with a chain of supermarkets.

Which types of integration have taken place?

• diversification followed by horizontal

• horizontal followed by vertical backward

• vertical backward followed by vertical forward

• vertical forward followed by diversification

A stock exchange is a market in which

• a system of barter operates.

• the interest rate is fixed.

• the value of the exchange rate is determined.

• shares are bought and sold.

General Motors, a large multi-national company based in the United States, sold some of its

European car assembly plants to other car manufacturers during the world recession (economic downturn) in 2009.

Which economic reason would have been most likely to influence this decision?

• to benefit from horizontal integration of manufacturing

• to diversify and expand its product range

• to encourage vertical integration of sales and production

• to reduce its excess capacity in car production

Why might a government encourage a monopoly?

• It can have high average costs.

• It can compete against foreign firms.

• It can prevent innovation.

• It can make excessive profits.

What might be a direct benefit to the individual worker of a specialised job?

• Specialisation enables a better quality product to be produced.

• Specialisation enables the firm to introduce more machinery.

• Specialisation enables the worker to become more skilled.

• Specialisation makes better use of resources.

A large tyre manufacturer expands by taking over a rubber plantation.

Of what is this an example?

• backward vertical integration

• diversifying integration

• forward vertical integration

• horizontal integration

The world’s open-cast mining of mineral ores is dominated by a few multinational companies which employ relatively few workers.

What does this indicate?

• Production is capital-intensive.

• Productivity of labour is low.

• The market is perfectly competitive.

• There is a monopoly of world production.

In 2007, a huge industrial mining company attempted to buy another industrial mining company. The attempt failed.

In 2010, the same mining company made an offer to buy a company that sells potash, which is used to improve agricultural soils.

How may the mining company’s attempts to buy these other companies be described?

• 2007 diversification (conglomeration)

  2010 horizontal integration

• 2007 horizontal integration

  2010 diversification (conglomeration)

• 2007 specialisation

  2010 vertical integration

• 2007 vertical integration

  2010 specialisation

What distinguishes a multinational company from other types of company?

• It exports its products.

• It imports its raw materials

• It produces outside its country of origin.

• It promotes its products in trade fairs abroad.

A firm produced 200 cars a week and employed 50 workers. A fall in demand caused the firm to reduce its output to 160 cars a week and its labour force to 32.

What was the percentage change in the firm’s productivity?

• It fell by 20%.

• It fell by 25%.

• It increased by 20%.

• It increased by 25%.