Th2.5: Economic Growth - Firms

Question 1

What will happen to investment?

Answer 1

investment will increase since businesses are more successful. they will have more money to invest and more incentive to invest as they can make more money from their investments

Question 2

What will happen to business confidence?

Answer 2

it will improve as there are potential demand increases for business’ products and this confidence will also lead to increased investment

Question 3

As a result of increased investment from both businesses and governments…

Answer 3

technology will improve - there will be more research and development done to invent more technology and more firms will be able to have the best tech, increasing efficiency and leading to lower costs

Question 4

The combination of which two things is likely to lead to higher profits?

Answer 4

higher demand and lower costs

Question 5

What opportunity does economic growth also provide?

Answer 5

the opportunity for new firms to establish themselves and allow existing ones to make more profit

Question 6

On the other hand, who may lose out?

Answer 6

firms who sell inferior goods (with negative income elasticities)

Question 7

What do changing markets and globalisation lead to?

Answer 7

some firms find their markets disappearing e.g DVD rental stores