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Theory of Firms flashcards

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Which of the following are advantages of starting a small firm? (a) Lending from financial institutions (b) Having government support (c) Less time commitment (d) Lower prices (Highly competitive)
Which of the following are advantages of starting a small firm? (a) Lending from financial institut...
(b). Having government support Reasons it's NOT: (a) Smaller firms tend to have a higher risk due to their unlimited liability. Thus, banks and other financial institutions would not have enough trust in their survival to allow them credit. (c) Having a smaller firm would require more personal time and attention as it usually does not have enough funds to hire workers, managers, etc. (d) Large firms have the benefits from Economies of Scale, something small firms do not. Economies of scale help these large firms reduce production costs.
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Theory of Firms Economics

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A summary of the theories of firms. Ranging from monopolies, perfectly competitive to small firms and the liquidy preference theory.

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