Benefits of economies of scale


Question 1:

a) Explain the main features of two kinds of business enterprise.
b) Illustrate the importance of limited liability to such types of business.

Question 2: With the aid of a diagram, show the effect of the given on the demand for hotel services:

a) A fall in prices
b) An increase in labor costs
c) A fall in the number of conference bookings
d) An increase in the number of short-break bookings

Question 3: With the help of examples, critically assess to what extent the increase in fast food sales is due to changing tastes as opposed to changing lifestyles.

Question 4: Describe the implications of the given for the hospitality industry:

a) Cuts in government spending
b) A fall in the value of the euro against the £
c) An increase in interest rates
d) The introduction of an airport tax

Question 5: Controlling the balance of payments and exchange rates are two of the main economic goals of the UK government.

Identify and explain two other main goals of UK government macroeconomic policy and how they might affect the hospitality industry.

Question 6:

a) Explain the merits of an oligopoly market.
b) With the help of instances, illustrate the benefits of economies of scale to a small hotel chain.
c) Explain the advantages of small hotels in a traditional tourist town.

Question 7:

a) Explain the limitations of the ‘multiplier’ when quantifying the impact of tourist activity on a region.
b) Describe how this compares with the impact on tourism in the economy as an entire.

Question 8: For examples below, explain whether a policy of ‘load pricing’ and/or ‘price discrimination’ is being adopted:

a) Lower weekday prices at a city hotel.
b) Two- to four-night accommodation packages.
c) Reduced prices for children’s meals.
d) Reduced rate accommodation for senior citizens throughout weekdays.
e) Discounted drinks prices in the early evening.

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Macroeconomics: Benefits of economies of scale
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