QUESTION 74 (5 marks)
A streamlined licensing system cuts a firm’s compliance hours from 500 to 300 per year with output and safety standards unchanged. Calculate the change in compliance hours. Explain why the qualification about safety is important when evaluating deregulation.
Practice marking scheme
Answer
Compliance hours fall 40%; reduced administrative costs can improve efficiency, but safeguards matter.
Working
(500 − 300)/500 × 100 = 40%. Saved labour time can be redirected to productive work, lowering resource costs without reducing output. If deregulation instead lowered safety or product standards, measured cost savings might be offset by injuries or other social costs. Evaluate the actual resource saving alongside maintained standards, rather than assume every reduction in regulation improves wellbeing.
Marking criteria
- Calculates 40%. [1 mark]
- Explains an efficiency/productivity mechanism. [2 marks]
- Evaluates the importance of standards and social costs. [2 marks]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabusCompare your working with the guide above.