Question 1

Discuss the importance of one natural resource to the survival, economic growth and development of your Caribbean country.


Bauxite is a natural resource found in Guyana and Jamaica. The bauxite industry provides employment for thousands of workers. It is also a main export product and foreign exchange earner. The growth of this industry will impact on the growth and development of these countries.

Question 2

Explain the importance of productivity to a business organization and state two ways by which productivity can be achieved.

Productivity is measured by the output of each worker. If workers are very productive, output will rise and unit cost of production will decline. This will result in higher profit margins for a business. Workers can be made more productive by training to improve skill and by the introduction of machinery and equipment to increase output.

Question 3

State one positive and one negative effect of external migration.

External migration deprives Caribbean countries of nationals who are professionals and those who posses a high level of skill. However, an advantage of external migration is that foreign exchange is remitted to Caribbean countries.

Question 4

Discuss the importance of two factors of production to the production process.

Capital is very important to the production process. Machinery, tools and equipment are needed for production as they increase the efficiency of workers.

Labour as a factor of production is also important. Labour combines raw materials and machinery to create goods and services. Methods applied to increase the productivity of labour will increase output.

Question 5

Differentiate between subsistence and surplus levels of production and explain the importance of surplus level production to an economy.

Subsistence level of production refers to a level of output that is just enough to ensure survival. However, surplus production refers to a production level that is greater than what is demanded locally.

Surplus production is important as it allows countries to export and earn foreign exchange. Foreign exchange earned can be used to import goods and services that are not produced locally.

Question 6

Give two examples of items made by cottage industries in your country and explain how these activities contribute to your economy’s growth.


Handcraft jewellery and T-shirt are popular cottage industry products in my country. Both these items are sold locally in many popular boutiques and therefore provide income for producers and retailers. They are also sold to visiting tourists and thus contribute to foreign exchange earnings. Output from cottage industries contributes to the GDP of the economy and thus economic growth as these industries expand to meet rising demand.

Question 7

State three factors to be considered when identifying a suitable location to set up a new business and give a reason for each.

Proximity to ones customers – A new business should be located where it will be seen by its most likely customers.

Available supply of labour- A new business will require the best quality workers to ensure that it makes a positive impact on the market.

Adequate infrastructure- A new business will need to be located in an area that is supported by infrastructure such as good roads, communication and transportation services so that customers and suppliers will have easy access.

Question 8

Differentiate between a forward and a backward linkage and give one example of each in your country.

A forward linkage refers to the industries that are linked in such a way so that the finished product of one becomes the raw material of another. For example, lumber from saw mills are used in the construction of houses and furniture.

A backward linkage refers to industries that are established to meet the needs of other already established industries. For example, hotels will backward link to the entertainment and transportation industries.

Question 9

Explain the importance of mechanization for the growth of small businesses in the Caribbean.


Mechanization is the use of mainly machinery in a production process. Machinery increases output. This will mean lower cost of production and therefore higher profits. Small businesses owners should endeavour to mechanize in order to increase output and be more competitive with large and medium sized business.

Question 10

What are the social and economic implications of mechanization and automation on Caribbean countries?


Mechanization increases the productivity of workers. High productivity as a result of machinery may cause job losses as fewer workers will be needed to produce the levels of output required. Automation also results in job losses as this process involves little human intervention.

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