Definitions

Question 1

Diversification definition?

Answer 1

• Increasing the range of products or markets served by a business

Degree of diversification depends on extent to which the those products/markets are diff to existing products/markets served by the business

Question 2

Market power definition?

Answer 2

• The ability of a firm to raise prices and earn supernormal profit

Question 3

Private-sector firms definition?

Answer 3

• Those that are not owned by the government
• May be owned by shareholders (as with PLCs like M&S) or family owned where shares are not traded on stock market (like LEGO)

Question 4

Sole proprietors definition?

Answer 4

• Private-sector firms which are owned and run by one person (e.g. a newsagent)