Unit 3.5 Firms

Front

Primary sector

Back

the direct use of natural resources; it is the extraction of basic materials and goods from the land and sea

Front

Secondary sector

Back

all activities in an economy that are concerned with either manufacturing or construction

Front

Tertiary sector

Back

all activities in the economy that involve the idea of a service

Front

Profit maximisation

Back

the greatest profit a firm can make - the level of output where there is the most positive difference between TR and TC

Front

Merger

Back

the process by which two independent firms come together to form a new firm

Front

Takeover

Back

the process by which one firm buys another firm either by buying out the owner or by purchasing more than 50% of its shares

Front

Horizontal merger

Back

two firms at the same stage of production in the same industry join together

Front

Vertical merger

Back

two firms at different stages in the same industry join together; this may be forward or backward

Front

Conglomerate merger

Back

two firms with unrelated business activities join together

Front

Economies of scale

Back

where an increase in the level of production results in a fall in the average cost of production