Economics 9708 · AS & A Level · 7.7

7.7 — practice question

Which mix of statements about small firms and large firms is correct?

  • Asmall firms are more common in manufacturing than in services; large firms face high barriers to exit
  • Bsmall firms are more numerous than large ones; large firms do not experience diseconomies of scale
  • Csmall firms can do well when each item produced must be different; large firms may arise from internal growth or mergers
  • Dsmall firms cannot have any monopoly power; large firms cannot earn supernormal profits

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