Growth and Survival of Firms
23 questions· page 1 of 3
The growth of a firm using a takeover is desirable because it enables consumers to benefit from lower prices and the firm to gain additional profits.
Evaluate this statement.
The growth of a firm using a takeover is desirable because it enables consumers to benefit from lower prices and the firm to gain additional profits.
Evaluate this statement.
Evaluate the consequences for the price and output of a firm if it changes its objective from profit maximisation to sales maximisation as a response to the principal-agent problem.
A government allows the merger of two large firms in the same industry.
With the help of a diagram, evaluate the view that this merger should not have been allowed.
Explain the difference between, and the purpose of, integration between firms and a cartel.
‘In large firms the long-run average cost falls as output increases and consumers benefit from lower prices. In small firms it does not. There is, therefore, no place in a modern economy for small firms.’
Do you agree with these statements?
Discuss the significance of economies of scale for the survival of firms.
Explain what is meant by the principal-agent problem and consider its importance in relation to the objectives for a firm.
‘Mergers of firms in the same industry are against the public interest. It is better that firms remain small.’
Discuss this opinion.