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Economics (AS & A Level) · May / June 2024 · Paper 32 · Question 8

9708Growth and survival of firms

What is likely to make it more difficult for a small firm to survive?

  1. Aincreased preference on the part of consumers for distinctive non-standardised products
  2. Breductions in the rate of interest charged by commercial banks
  3. Cthe absence of effective barriers to the entry of potential competitors
  4. Dthe existence of decreasing returns to scale

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Correct answer: C. the absence of effective barriers to the entry of potential competitors

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