Firms: Types, Mergers & Scale
Microeconomic Decision Makers · 3 question types
Exam Frequency Analysis
Past paper frequency (2018 to 2024)
This topic accounts for approximately 5% of your exam marks.
New emphasis in the 2027 syllabus; types of firms, the definitions of horizontal, vertical and conglomerate mergers, and economies/diseconomies of scale are examined directly. Guidance based on specimen materials.
Firms can be classified in two ways the syllabus expects you to know.
By sector of production:
Primary-sector firms extract raw materials from nature (farming, fishing, mining, forestry).
Secondary-sector firms turn raw materials into finished or semi-finished goods (manufacturing, construction).
Tertiary-sector firms provide services (retailing, banking, transport, tourism).
By ownership:
Private-sector firms are owned by private individuals and usually aim to make a profit (sole traders, partnerships, companies).
Public-sector firms are owned and run by the government, often to provide an important service (state-owned utilities, public transport) rather than purely for profit.