A Swiss multinational food manufacturer increased prices for its products by an average of 8% in 2022. It increased its prices in the USA by 11.6%. This multinational company (MNC) is one of the world's oldest MNCs. It started as a small firm but has grown over the last 160 years. Over this period, its decisions have always been influenced by opportunity cost.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. [1] A firm that is based / has its headquarters in one country (1).
2. [1] Operates / produces / sets up / works (1) in another country or countries (1).
3. [1] demand may be higher / lower in one country (1) resulting in higher / lower prices (1)
4. [1] supply maybe higher / lower in one country (1) resulting in lower prices (1)
5. [1] higher income / GNP per head in one country (1) means more able to afford to pay higher price (1)
6. [1] price elasticity of demand may vary (1) more power to raise price where demand is inelastic (1)
7. [1] greater competition in one country / more substitutes (1) leads to lower prices to be competitive (1)
8. [1] indirect tax rates may vary e.g. higher GST / VAT / import tariffs (1) will lead to higher price (1)
9. [1] government subsidies may be given in some countries (1) lowering price (1)
10. [1] local material costs / wages may be lower in one country (1) lowering costs of production mean lower prices (1)
11. [1] different transport costs (1) may be cheaper to transport to countries close by (1)
12. [1] quality of good may be higher (1) enable firm to charge a higher price (1).
13. [1] opportunity cost is the (next) best alternative (1) forgone / given up (1)
14. [1] example of consumers e.g. must decide between buying different products (1) due to limited income (1)
15. [1] example of workers e.g. must decide between different jobs or between work and leisure (1) as time is limited (1)
16. [1] example of producers / firms e.g. must decide what to make / how to make it / where to locate (1) as they have limited (financial) resources (1).
17. [1] more competition, lower price, higher quality
18. [1] small firms may provide a more personal service
19. [1] may produce niche products
20. [1] may be more flexible / react quickly to consumer needs
21. [1] may introduce new ideas / new varieties of products
22. [1] may be easier access – consumers may not have to travel so far.
23. [1] may be wasteful duplication
24. [1] may waste consumers time with too much information to process
25. [1] may have higher costs as unable to take advantage of economies of scale
26. [1] may reduce profits of larger firms, reducing their spending on research and development
27. [1] may not stay in business for long.