CAIE A-Level Economics 7.7.1 Firm Size

CAIE A-Level Economics 7.7.1 Firm Size
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise explaining why firms remain small or become large through market size, niche demand, personal control, finance, entry conditions and economies or diseconomies of scale.

How this is tested

  • link niche products, personal service and rapidly changing demand to small-firm survival
  • link internal growth, mergers, finance and scale economies to larger firm size
  • evaluate size through minimum efficient scale, barriers, owner aims and diseconomies

Question 8

[Maximum number: 1]

Firms often remain small even when growth could result in technical economies of scale.
What is not a likely reason for this?

A

Demand for the product tends to change often and rapidly.

B

Individual entrepreneurs wish to keep a tight personal control over their own firm.

C

The entrepreneurs who establish the firms tend to be ambitious risk-takers.

D

The market in which they operate is very specialised in nature, often selling unique products.