Edexcel A-Level Business Theme 3.2 Business growth overview quiz quiz

A rise in total costs as a firm increases its level of output

A fall in unit (average) cost as output rises

A rise in unit cost as the firm increases its scale of output

A type of government tax charged specifically on large firms

$10

$16

$8

$20

Bulk buying discounts gained from ordering the inputs in much larger quantities

Lower marketing costs spread across a far greater volume of total output

Cheaper finance available to a larger firm seen as a lower lending risk

Poor communication, coordination problems and falling morale in a large firm

Joining a firm at the same stage in the same industry

Joining a supplier further back up the supply chain to control inputs

Joining a customer or distributor further forward towards the end market

Joining a firm in an entirely unrelated industry to spread the firm's risk

Forward vertical integration up towards the customer

Backward vertical integration

Conglomerate integration into an unrelated market

Horizontal integration with a direct rival firm

A merger is one firm buying another outright; a takeover is a deal made by mutual agreement

They are identical and the two terms can be used interchangeably in practice

A merger is by agreement as equals; a takeover is one firm acquiring control of another

A takeover is always a form of organic growth funded from the firm's own resources

Growth through mergers and takeovers of other firms in the same market

Growth achieved purely by selling new shares to outside investors

Growth that requires no funding of any kind from the business at all

Growth by expanding the firm's own operations using its own resources

Expanding faster than the firm's cash can support, straining liquidity

Selling goods too cheaply, so that the firm's profit margin is squeezed

Trading internationally across many overseas markets at the same time

Holding too much stock, so that cash is tied up in unsold inventory

Because all small firms are unprofitable and cannot fund any expansion at all

Because of a small niche market, owners' preference for independence, or to keep service and quality

Because they are not legally allowed to grow beyond a fixed size under the law

Because economies of scale only ever harm small firms and never offer them any cost benefit at all whatsoever

Larger firms are always more profitable than smaller ones because they all gain economies of scale as they grow

Small firms are always more profitable because they avoid diseconomies of scale entirely

Size does not guarantee profitability; a focused small firm can be more profitable relative to its capital

Size has no effect on a firm's costs or its margins at all in any industry