Theory question 102
Business CombinationsCommerce 2 (theory)
(a) State four functions of a cartel.
(b) Explain three advantages and three disadvantages of public enterprises.
Show the model answer
(a) Any four: fixes common prices for members' products; sets output/production quotas for members; shares out markets (sales territories) among members; may take over selling for all members; reduces competition among members; fights competition from non-members.
(b) Advantages (any three, explained): provide essential services (water, electricity) at low cost; provide infrastructure; create employment; prevent exploitation by private monopolies; have large capital for big projects; promote balanced development.
Disadvantages (any three, explained): inefficiency and bureaucracy (red tape); political interference/appointment of unqualified people; corruption, waste and embezzlement; monopoly power may be abused; heavy burden on government funds/losses; lack of competition leads to poor service.
Explain each advantage or disadvantage in a sentence, not just a word.