Economics 9708 · AS & A Level · 7.7

7.7 — practice question

What factors would probably help a small firm stay in business, and what factors could threaten its survival?

  • Ahelp: contestability of the market; threat: expensive new technology
  • Bhelp: customers valuing personal service; threat: new government regulations on its business
  • Chelp: low barriers to entering its industry; threat: managerial diseconomies of scale
  • Dhelp: selling a homogeneous product; threat: new firms entering the market

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