Firms and production

Which sector of the economy contains firms that provide services to the general public and other firms?

• Primary

• Secondary

• Tertiary

• Public

Conglomerates are formed when firms

• in the same industry combine to form a single firm
• split off to start separate businesses in different industries
• split off to start separate businesses in the same industry
• in completely separate industries combine to form a single firm

Which is not a method used to measure the size of firms?

• Cost of production

• Sales revenue

• Market share

• The number of employees

All of the following are disadvantages of a corporation except:

• greater ability to raise financial capital
• face more government regulation
• double taxation of profits
• less direct owner control

A toy manufacturer merges with a chemical company. What type of merger is this?

• Conglomatete

• Horizontal

• Vertical merger backwards

• Vertical merger forwards

McDonald's and Burger King merging would be an example of a ....

• Horizontal Merger
• Vertical Merger
• Diagonal merger
• Conglomerate Merger

Which is not an advantage of small firms?

• Greater degree of control

• Quicker decision making

• Opportunities to gain economies of scale

• Easier to set up.

Economies of scale are the reduction in costs of production achieved through increased output.

• True
• False

Why might the growth of an industry reduse a firm's cost of production?

• It may create greater competition for resources

• It may cause a decrease in subsidiary industries

• It may lead to the development of specialist markets

• It may reduce the supply of infrastructure

If a firm increases its use of all factors of production but sees an increase in its average costs, this is a sign of

• Internal diseconomies of scale
• External returns to scale
  
• Diminishing marginal returns
  
• Decreasing returns to scale