Discuss whether people would prefer to buy a product from a small firm or a large firm.
There are several reasons people would prefer to buy from a small firm:
• Small firms may be flexible and quick to respond to changes in consumer demand. This is because they do not have to consult others
• Small firms may provide a personal service and can adapt to particular customer requirements
• Small firms may be specialised and produce high-quality products
• Small firms may receive government subsidies enabling them to keep the price low and quality high. Furthermore, these firms are unlikely to experience diseconomies of scale
There are several reasons people would prefer to buy from a large firm:
• Small firms may provide lower prices due to lower costs. This is because there may of economies of scale
• Large firms may have better-known brands due to advertising
• Large firms may provide a wider variety of products. They may also provide better quality products and better after-sales service.