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Emma O’Neill is an entrepreneur and has set up a business designing and creating gardens - Leaving Cert Economics - Question 3 - 2015
Question 3
Emma O’Neill is an entrepreneur and has set up a business designing and creating gardens. The table below shows her estimated costs of production and revenues over a... show full transcript
Worked Solution & Example Answer:Emma O’Neill is an entrepreneur and has set up a business designing and creating gardens - Leaving Cert Economics - Question 3 - 2015
Step 1
Explain the underlined term above.
Answer
An entrepreneur is a person who undertakes the risk of setting up a business to create goods or services. Entrepreneurs are agents of change in the economy, combining resources such as labor, capital, and land to produce value and drive innovation.
Step 2
Using the table calculate the total cost at A and B (show your workings in your answer book) and the total profit at C and D (show your workings in your answer book).
Answer
To find the total costs at A and B, we must add fixed costs and variable costs.
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At A: Fixed Costs = 2,000, Variable Costs = 3,000
Total Cost = Fixed Costs + Variable Costs
Total Cost at A = 2,000 + 3,000 = 5,000 -
At B: Fixed Costs = 2,000, Variable Costs = 4,000
Total Cost = 2,000 + 4,000 = 6,000
Next, we find the profits:
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At C: Total Revenue = 6,800, Total Cost at B = 6,000
Total Profit at C = Total Revenue - Total Cost
Total Profit at C = 6,800 - 6,000 = 800 -
At D: Total Revenue is yet to be determined, using similar calculations as above could provide insight into profits.
Step 3
Identify which of the above are fixed costs and which are variable costs.
Answer
In the context of gardening expenses:
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Fixed Costs: These are consistent expenses that do not change with the level of output. They include costs such as the purchase of the truck used for transporting goods.
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Variable Costs: These vary directly with production output. They include costs like plants/shrubs and fertilizer, which increase as more gardens are designed and created based on demand.
Step 4
Explain each of the underlined terms.
Answer
Labour refers to the human effort utilized in the production of goods and services, which is compensated through wages.
National Minimum Wage Rate is the lowest wage that employers legally must pay their employees, ensuring fair compensation for labor.
Step 5
State and explain two factors which may encourage Emma to employ additional workers.
Answer
- Increased Demand for Services: A rise in demand often leads to an increased workload, necessitating the hiring of additional staff to meet customer needs effectively.
- Government Policies: Supportive government initiatives can create a favorable environment for hiring. For instance, tax breaks for businesses that expand their workforce may incentivize Emma to employ more workers.
Step 6
Outline two reasons why entrepreneurship is important for the Irish economy, other than creating employment.
Answer
- Improve the Balance of Payments: Exporting products enhances the country's financial standing in global trade, positively affecting economic stability.
- Encourage Innovation: New products and services contribute to market diversity and can elevate consumer choice and satisfaction.
Step 7
Outline one action which each of the following could take to encourage entrepreneurship: The Irish Government.
Answer
The Irish Government could enhance entrepreneur education, promoting programs that train individuals on the essentials of starting and running a business, ensuring a skilled entrepreneurial class.
Step 8
Outline one action which each of the following could take to encourage entrepreneurship: Irish consumers.
Answer
Irish consumers can contribute to entrepreneurship by choosing to buy Irish, actively supporting local businesses and products which encourages economic growth and sustainability in the market.