The growth of a firm using a takeover is desirable because it enables consumers to benefit from lower prices and the firm to gain additional profits. Evaluate this statement.

Economics

IGCSE&ALevel

CAIE

Exam No：9708_s25_qp_41 Year：2025 Question No：3

Answer:

7.5.10 calculation of supernormal and subnormal profit

7.5.6 internal and external economies of scale

7.5.9 definition of normal, subnormal and supernormal profit

7.6.4.1 revenues and revenue curves

7.6.4.2 output in the short run and the long run

7.6.4.3 profits in the short run and the long run

7.6.4.4 shutdown price in the short run and the long run

7.6.4.5 derivation of a firm’s supply curve in a perfectly competitive market

7.6.4.6 efficiency and X-inefficiency in the short run and the long run

7.6.4.7 contestable markets: features and implications

7.6.4.8 price competition and non-price competition

7.6.4.9 collusion and the Prisoner’s Dilemma in oligopolistic markets, including a two-player pay-off matrix

7.7.3.1.1 horizontal

7.7.3.1.2 vertical (forwards and backwards)

7.7.3.1.3 conglomerate

7.7.3.2 reasons for integration

7.7.3.3 consequences of integration

7.8.1 traditional profit-maximising objective of firms

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