Sizes & Types of firms 3.1.1

Question 1

Reasons why firms stay small

Answer 1

Regulation
Lack of finance
Niche Markets
Diseconomies of Scale
Profit satisfice

Question 2

Reasons why firms grow

Answer 2

Increase sales and profit
Increase market share
Diversify
Economies of scale
Owners objectives

Question 3

What is the principal-agent problem

Answer 3

When the agent(manager who runs and controls the business) pursues different objectives to the principal(shareholders who own business)

Question 4

What are the different types of firms

Answer 4

Public Sector
Private Sector
For-Profit
Not-for-Profit