You are applying for a job at this
business. You have been asked the following questions. You will be using your Economics knowledge
to help the business make business decisions.
You are applying for a graduate trainee position at UK Steel PLC. As part of the selection
process you have been asked a series of questions to demonstrate your understanding of
economics and the economic environment for UK Steel PLC.
UK Steel PLC is the largest steel producer in the UK. It exports 50% of its steel
internationally and 50% is sold in the UK market. Its major international market is the EU.
To produce steel UK Steel PLC uses large quantities of iron ore. It also uses large quantities
of oil to power is factories.
Historically UK Steel dominated the UK steel market, but now there are many international
competitors
Q1
a) Describe the key differences and similarities between a Private Limited Company (LTD)
and a Publicly Limited Company (PLC)? (6 marks)
b) Explain what the ‘agency problem’ is, and why PLCs often suffer from this more than
LTDs. (6 marks)
c) UK Steel PLC used to be a nationalised business but was privatised in the 1980s. Explain
two negatives and two positives of being a privately owned business. Do you think this is the
best type of ownership for UK Steel PLC? Explain your reasons. (8 marks)
Q2
a) UK Steel PLC wants to increase production at one of its factories in South Wales. In the
short term they cannot increase the size of the factory but they can increase their variable
input of labour. Explain why this may initially work but will eventually lead to ‘diminishing
returns’. (6 marks)
b) Describe two ways UK Steel PLC might suffer from diseconomies of scale. (6 marks)
c) What type of market structure does UK Steel PLC operate in the UK? Explain if this type
of market structure is advantageous for consumers and UK Steel PLC. (8 marks)
Q3
a) In recent years there has been a significant increase in Asian steel in the UK market.
Using a supply and demand diagram show how this will impact the price and quantity of
steel in the UK market. Fully label your diagram. (6 marks)
b) The government has announced several large scale infrastructure projects including
Hinkely Point and HS2. On a supply and demand diagram show the impact of this change on
price and quantity of steel in the UK market. Again fully label your diagram. (6 marks)
c) Specifically referring to the steel market describe 4 other reasons for a shift in supply. (8
marks)
Q4
a) List three government macroeconomic policies and explain what the government wants to
achieve with these policies. (6 marks)
b) Which stage in the business cycle often has high inflation? (2 marks)
c) Explain how a demand side macroeconomic policy can be used to reduce inflation. How
will this effect UK Steel PLC? (12 marks)
Q5
a) Explain the aims of one international economic organisation. How will this impact upon UK
Steel PLC? (5 marks)
b) Using a diagram explain the changes in a global market used by UK Steel PLC over the
last 3 years. Use either the global oil market, the global iron ore market or a currency
market. How have these markets changed and what caused the changes? What is the
impact of this change for UK Steel PLC? (10 marks)
The coursework will also be marked on its presentation. This will include a brief introduction,
accurate spelling, grammar and the appropriate language used. (5 marks)
