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Benefits of Large Firms in an Economy

Question

Discuss whether or not an economy will benefit from its firms getting larger.

Category:

Firm Behavior and Strategies

Frequently asked question

Preview Answer

I. 🍃Introduction
- Brief explanation of the topic

II. Reasons why producing more may be beneficial
- More workers may be employed, reducing unemployment
- Larger firms may be more price competitive and produce at lower average cost, leading to economic growth, lower prices, and increased exports

III. Reasons why producing more may not be beneficial
- More imported raw materials/capital goods may be purchased, worsening the current account position
- Larger firms may have more market power, leading to less efficiency and diseconomies of scale, causing cost-push inflation and reducing exports

IV. 👉Conclusion
- Summary of the points made
- Final thoughts on the topic

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