Firms
3.4What the syllabus asks of you
- Different types of firms: primary/secondary/tertiary sector firms
- Different types of firms: private sector/public sector firms
- Different types of firms: advantages and disadvantages of small and large firms
- Mergers: definitions, examples, advantages and disadvantages of different types of mergers: horizontal, vertical and conglomerate
- Economies and diseconomies of scale: how internal and external economies and diseconomies of scale can affect a firm/industry as the scale of production changes
- Economies and diseconomies of scale: drawing and interpretation of average total cost (ATC) diagrams to illustrate economies and diseconomies of scale
Read the notes first
Chapter 3: Firms
Drill this topic
Every question on Firms, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
48 questions
1May / June 2026 · Paper 11 · Q13Show mark scheme →
Athe age of the firm
Bthe sector in which the firm operates
Cthe size of the market in which the firm operates
Dthe type of business organisation used by the firm
Mark scheme
2May / June 2026 · Paper 12 · Q14Show mark scheme →
Adiseconomies of scale
Beconomies of scale
Cexternal diseconomies of scale
Dexternal economies of scale
Mark scheme
3Oct / Nov 2025 · Paper 12 · Q14Show mark scheme →
Aconglomerate
Bhorizontal
Cinternal
Dvertical
Mark scheme
4Oct / Nov 2025 · Paper 13 · Q13Show mark scheme →
AEconomies of scale are present in the Japanese car industry.
BManagerial problems exist in the Japanese car industry.
CProductivity is low in Japan.
DThe Japanese car industry is very labour-intensive.
Mark scheme
5May / June 2025 · Paper 11 · Q14Show mark scheme →
Aexternal diseconomies of scale
Bexternal economies of scale
Cinternal diseconomies of scale
Dinternal economies of scale
Mark scheme
6May / June 2025 · Paper 12 · Q11Show mark scheme →
AConsumer demand is rising.
BMarketing economies of scale occur at higher levels of output.
CThe firm faces problems of co-ordination between departments.
DThe firm is negotiating discounts through bulk buying.
Mark scheme
7Oct / Nov 2024 · Paper 12 · Q12Show mark scheme →
Abackward vertical
Bconglomerate
Cforward vertical
Dhorizontal
Mark scheme
8Oct / Nov 2024 · Paper 12 · Q13Show mark scheme →
Adifficulties in controlling the firm
Bexternal economies of scale
Cmanagerial economies of scale
Dtechnical economies of scale
Mark scheme
9May / June 2024 · Paper 11 · Q15Show mark scheme →
Abackward vertical
Bconglomerate
Cforward vertical
Dhorizontal
Mark scheme
10May / June 2024 · Paper 12 · Q12Show mark scheme →
Abetter communication: no; greater independence: no; lower average cost: yes
Bbetter communication: no; greater independence: yes; lower average cost: no
Cbetter communication: yes; greater independence: yes; lower average cost: no
Dbetter communication: yes; greater independence: yes; lower average cost: yes
Mark scheme
11Oct / Nov 2023 · Paper 12 · Q14Show mark scheme →
Ato diversify their operations
Bto generate economies of scale
Cto improve lines of communication
Dto increase market share
Mark scheme
12May / June 2023 · Paper 11 · Q14Show mark scheme →
Athe market for the product local; fixed costs of entering the industry high
Bthe market for the product local; fixed costs of entering the industry low
Cthe market for the product national; fixed costs of entering the industry high
Dthe market for the product national; fixed costs of entering the industry low
Mark scheme
13May / June 2023 · Paper 11 · Q16Show mark scheme →
Aconstant returns to scale
Bdiseconomies of scale
Cexternal diseconomies of scale
Dexternal economies of scale
Mark scheme
14May / June 2023 · Paper 12 · Q16Show mark scheme →
Aa fall in demand for the products produced by the firm
Ba merger with another firm that results in slower decision-making
Cspending more on research and development to create new products
Dthe lack of skilled labour in the geographical area where the firm is based
Mark scheme
15Oct / Nov 2022 · Paper 12 · Q15Show mark scheme →
ASmall firms are more able to adapt to changes in market conditions.
BSmall firms are more able to reduce competition through barriers to entry.
CSmall firms benefit from lower cost per unit from economies of scale.
DSmall firms have higher total fixed costs and lower average fixed costs.
Mark scheme
16Oct / Nov 2022 · Paper 13 · Q15Show mark scheme →
Ato bring its suppliers into the same firm
Bto get closer to its customers to increase sales
Cto reduce its costs per unit of output
Dto reduce the amount of corporation tax it paid
Mark scheme
17May / June 2022 · Paper 11 · Q10Show mark scheme →
Aincreased average revenue
Bincreased external economies of scale
Cincreased internal economies of scale
Dincreased market share
Mark scheme
18May / June 2022 · Paper 12 · Q11Show mark scheme →
Aa farm
Ba hairdresser
Ca steelworks
Da supermarket
Mark scheme
19Oct / Nov 2021 · Paper 12 · Q14Show mark scheme →
AThe firm experiences management problems.
BThe firm gains the benefits of merging with another firm.
CThe firm pays lower interest rates to banks.
DThe firm receives significant discounts from bulk buying.
Mark scheme
20Oct / Nov 2021 · Paper 12 · Q15Show mark scheme →
Aincreased capital for research and development
Blower average costs through economies of scale
Creduced range of vehicles produced
Duse of a wider range of marketing information
Mark scheme
21Oct / Nov 2021 · Paper 13 · Q14Show mark scheme →
A8 000 / 10 000 / 12 000
B8 000 / 14 000 / 27 000
C10 000 / 16 000 / 21 000
D10 000 / 20 000 / 30 000
Mark scheme
22Oct / Nov 2021 · Paper 13 · Q15Show mark scheme →
Abackward vertical
Bconglomerate
Cforward vertical
Dhorizontal
Mark scheme
23May / June 2021 · Paper 11 · Q12Show mark scheme →
AAs more cobalt is mined average costs increase.
BFewer workers are needed to produce the required output.
COutput per hour increases as more machinery is used.
DOverhead costs are spread as output increases.
Mark scheme
24May / June 2021 · Paper 11 · Q13Show mark scheme →
Ahigh level of competition
Bhigh scope for economies of scale
Clong period of training required
Dlow start-up and running costs
Mark scheme
25May / June 2021 · Paper 11 · Q22Show mark scheme →
Aprimary sector: fell; secondary sector: rose
Bprimary sector: fell; secondary sector: unchanged
Cprimary sector: rose; secondary sector: fell
Dprimary sector: rose; secondary sector: unchanged
Mark scheme
26May / June 2021 · Paper 12 · Q13Show mark scheme →
Adiversification
Bhorizontal
Cvertical backward
Dvertical forward
Mark scheme
27May / June 2021 · Paper 12 · Q22Show mark scheme →
Aprimary sector: fell; secondary sector: rose
Bprimary sector: fell; secondary sector: unchanged
Cprimary sector: rose; secondary sector: fell
Dprimary sector: rose; secondary sector: unchanged
Mark scheme
28Oct / Nov 2020 · Paper 12 · Q14Show mark scheme →
Abackward vertical
Bconglomerate
Cforward vertical
Dhorizontal
Mark scheme
29Oct / Nov 2020 · Paper 12 · Q15Show mark scheme →
Aindividuals
Bshareholders
Cspecialist managers
Dthe government
Mark scheme
30May / June 2020 · Paper 12 · Q15Show mark scheme →
Ain the short run
Bif variable factors become fixed
Cwhen all factors of production are fixed
Dwhen all factors of production are variable
Mark scheme
31Oct / Nov 2019 · Paper 12 · Q12Show mark scheme →
Amultinational company
Bpublic limited company
Cpublic corporation
Dsole trader
Mark scheme
32Oct / Nov 2019 · Paper 13 · Q12Show mark scheme →
Afreely transferable on the stock exchange.
Bowned by the government.
Cowned only by its workers.
Drestricted in their transferability.
Mark scheme
33Oct / Nov 2019 · Paper 13 · Q13Show mark scheme →
Abackwards vertical integration
Bconglomerate integration
Cforwards vertical integration
Dhorizontal integration
Mark scheme
34May / June 2019 · Paper 11 · Q12Show mark scheme →
Aconglomerate
Bhorizontal
Cvertical backwards
Dvertical forwards
Mark scheme
35May / June 2019 · Paper 11 · Q13Show mark scheme →
AGovernment controls prevent the exploitation of consumers.
BHigh fixed capital costs exist.
CLabour-intensive production techniques are used.
DNon-price advertising increases competition.
Mark scheme
36May / June 2019 · Paper 12 · Q13Show mark scheme →
Athe decrease in average revenue as output increases
Bthe decrease in fixed cost as output increases
Cthe increase in average total costs as output increases
Dthe increase in total costs as output increases
Mark scheme
37Oct / Nov 2018 · Paper 12 · Q13Show mark scheme →
Abackward vertical integration
Bconglomerate merger
Cforward vertical integration
Dhorizontal integration
Mark scheme
38Oct / Nov 2018 · Paper 13 · Q13Show mark scheme →
Abackward vertical integration
Bdiversifying integration
Cforward vertical integration
Dhorizontal integration
Mark scheme
39May / June 2018 · Paper 11 · Q4Show mark scheme →
Aassembling computers
Bgiving legal advice
Charvesting grain
Dmaking bread
Mark scheme
40May / June 2018 · Paper 11 · Q13Show mark scheme →
Along run average cost: decreasing; total cost: decreasing
Blong run average cost: decreasing; total cost: increasing
Clong run average cost: increasing; total cost: decreasing
Dlong run average cost: increasing; total cost: increasing
Mark scheme
41May / June 2018 · Paper 12 · Q13Show mark scheme →
Aan increase in extra administration
Ban increase in raw materials costs
Can increase in taxation on company profits
Dan increase in the national minimum wage
Mark scheme
42Oct / Nov 2017 · Paper 12 · Q12Show mark scheme →
Aa lack of communication in a firm
Ba reduction of cost by buying in bulk
Ca shortage of skilled labour in an area
Dtraffic congestion in a particular area
Mark scheme
43Oct / Nov 2017 · Paper 13 · Q12Show mark scheme →
Aa lack of communication in a firm
Ba reduction of cost by buying in bulk
Ca shortage of skilled labour in an area
Dtraffic congestion in a particular area
Mark scheme
44May / June 2017 · Paper 11 · Q12Show mark scheme →
Amotor cars.
Brubber.
Ctyre-producing machinery.
Dtyres.
Mark scheme
45May / June 2017 · Paper 12 · Q12Show mark scheme →
Amotor cars.
Brubber.
Ctyre-producing machinery.
Dtyres.
Mark scheme
46May / June 2016 · Paper 11 · Q14Show mark scheme →
Aconstant returns to scale
Bdiseconomies of scale
Cexternal diseconomies of scale
Dexternal economies of scale
Mark scheme
47May / June 2016 · Paper 12 · Q13Show mark scheme →
Aa change in their ownership structure
Ba lowering of average costs of production
Ca move from national to international markets
Da reduction in the level of market risk
Mark scheme
48May / June 2016 · Paper 12 · Q14Show mark scheme →
Aconstant returns to scale
Beconomies of scale
Cexternal diseconomies of scale
Dexternal economies of scale
Mark scheme