A change in the supply of enterprise can lead to the creation of new firms. In 2016, a theme park in Hong Kong recorded a loss as visitor numbers dropped by 9%. In 2017, the same public limited company opened a second, larger theme park in Shanghai. The new theme park is expected to gain from both internal and external economies of scale.
(a)[2]
Define the loss function.
(b)[4]
Explain, with examples, how an internal economy of scale differs from an external economy of scale.
(c)[6]
Analyse the ways in which a government could increase the supply of enterprise.
(d)[8]
Discuss whether or not consumers would benefit if a firm changed from being a public limited company to a public corporation (state-owned enterprise).
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