Lesson 19-Advantages and disadvantages of a large and small firms

Question 1

What are the 3 ways to measure the size of a firm?

Answer 1

1.Turnover/sales
2. Number of employees
3. Capital employed

Question 2

Define capital emplyed

Answer 2

The money needed to start the business

Question 3

State the 4 advantages of a firm remaining small

Answer 3

1. High flexibility and can easily adapt according to the situation
2. Can provide personal services
3. Improved communication
4. Improved motivation among employees

Question 4

State 3 disadvantages of a firm remaining small

Answer 4

1.Lack of finance
2. Cannot achieve EOS
3.Less Profits

Question 5

State 3 advantages of a large firm

Answer 5

1.EOS
2. Monopoly power
3.Acess to more finance

Question 6

State an disadvantage of large firms

Answer 6

Diseconomies of scale

Question 7

State 5 reasons why some firms remain small

Answer 7

1. Lack of finance
   2.Cometition
   3.Tax incentive
   4.Employment
2. Ownership and control
3. Minimum Efficient Scale