Question 3May/June 20269708/311 mark
During a recession, two holiday companies agree to join together and become a single company to improve their chances of survival. How would this be described?
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Paper 3 multiple-choice questions and Paper 4 data-response/essay questions and case studies, retyped from the original Cambridge material; artwork and data tables are reproduced as images. Mark schemes show the official answer key and level-marked indicative content.
About Growth and survival of firms
Questions on how firms grow and survive: internal growth, horizontal, vertical and conglomerate integration, and why small firms survive alongside large ones.
55 past paper questions on this topic since 2020, across 17 exam sessions.
How often it comes up
| Year | Paper 3 | Paper 4 | Total | Chart |
|---|---|---|---|---|
| 2026 | 3 | 0 | 3 | |
| 2025 | 4 | 2 | 6 | |
| 2024 | 10 | 2 | 12 | |
| 2023 | 5 | 1 | 6 | |
| 2022 | 7 | 1 | 8 | |
| 2021 | 8 | 3 | 11 | |
| 2020 | 5 | 4 | 9 |
Every 2025–2026 question on Growth and survival of firms
The whole topic on one page, with answers and mark schemes. Printing this page prints just this list.
Paper 3 · Multiple choice (7)
Question 2May/June 20269708/321 mark
What is a likely reason for a firm to remain small?
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Question 4May/June 20269708/341 mark
Two US chemical production firms merged. What is the likely benefit to the US chemical industry of this merger?
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Question 2Oct/Nov 20259708/311 mark
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Question 3Oct/Nov 20259708/341 mark
What is an example of forward vertical integration?
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Question 7May/June 20259708/311 mark
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Question 7May/June 20259708/321 mark
Two manufacturing firms in the same industry, producing similar products, are considering merging together. What would be the least convincing reason for merging?
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Paper 4 · Data response and essays (2)
Case study: Resources in Brazil
Between 2000 and 2020, Brazilian GDP, measured in US dollars ($), rose from $1.19 trillion to $1.89 trillion at constant prices (2015). In the same period GDP per head rose from $6745 to $8204 at constant prices (2015).
The strength of the Brazilian economy lies in the variety and quantity of its natural resources. For example, Brazil is one of the world’s largest exporters of agricultural commodities, mainly soya and beef. There are also significant exports of minerals. Brazil is the second largest iron ore producer in the world and extracts 3.4% of the world’s crude oil.
World agricultural markets are dominated by four large commodity traders that buy and sell products such as grain and soya. They have grown through both horizontal integration and vertical integration. These traders own many large farms, they process farm produce and transport it to trade on international markets. In addition to buying and selling, the traders provide seed and fertiliser to farmers and supply storage for their products. They use agricultural by-products to produce items like biofuel. These traders also provide financial services to these markets.
Commodity traders are very important to the development of complex global food markets. Food prices, access to scarce resources such as land and water, climate change and food security are all affected by the activities of traders. In Brazil, the output of 15 000 farmers is purchased by a single trader.
In Brazil the development of agriculture, mining and oil extraction all contribute to environmental degradation. Both agriculture and mining have been accompanied by deforestation of the Amazon rainforest. Access roads to mining areas also lead to deforestation. Waste water from mining activity is frequently stored in reservoirs behind dams. On two occasions in the last 10 years these dams failed to hold back the water. This led to widespread flooding, the discharge of pollutants such as mercury into rivers, and deaths.
Sources: The Guardian, 23 August 2022
Cereal Secrets, Oxfam Research Report, August 2012 oec.world/en/profile, August 2023
Question 1(b)Oct/Nov 20259708/424 marks
(b) Explain one possible benefit of horizontal integration and one possible benefit of vertical integration. [4]
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Explain one possible benefit ofhorizontal integration and one possible benefit of vertical integration. Horizontal integration definition (1) + Benefit (1) Vertical integration definition (1) + Benefit (1)
Question 3May/June 20259708/4120 marks
3 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. [20]
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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.
Use Table A: AO1 Knowledge and understanding and AO2 Analysis and Table B: AO3 Evaluation to mark candidate responses to this question.
AO1 and AO2 out of 14 marks. AO3 out of 6 marks.
Indicative content Responses may include:
AO1 Knowledge and understanding and AO2 Analysis
- Recognition that a takeover can be classified as a factor determining the external growth of a firm
- Differentiates between a takeover, which occurs when one firm buys another firm and a merger which takes place when two firms unite to form one new company
- Takeovers can relate to different stages of production. For example, horizontal, vertical integration.
- Analysis should refer to the benefits associate with gaining economies of scale via horizontal integration. For example, lower costs and lower prices for the consumer
- Analysis could also be used by referring to backward/forward vertical integration which might lead to further cost savings which can be passed on to the consumer.
- Firms might also increase profits by increasing their market share and increasing their total revenue
AO3 Evaluation
- The cost benefits of economies of scale might not be passed on to the consumer through lower prices
- An increase in market share might increase monopoly power and allow the firm to control output and charge higher prices to the consumer.
- Some takeovers can be very costly in the long run and this may decrease profits in the long run.
- A takeover will create a much larger organization which may have to deal with unexpected communication problems which increase costs and reduce profits
- Some takeovers might lead to intervention by the competition authorities which might result in price regulation
- Culture clashes may arise within firms involved which may lead to diseconomies of scale and rising consumer prices
- A conclusion should attempt to address each element of the statement. The key words ‘low consumer prices and ’increased profits’ should be considered in the light of the preceding argument.
Accept all valid responses.
AO1 Knowledge and understanding and AO2Analysis
AO3 Evaluation essay
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A Level Economics questions by topic
Each topic opens this practice tool with only that topic’s questions, plus how often it comes up and every question on it in one list.
- Unit 7The price system and the microeconomy
- Ch 30Utility
- Ch 31Indifference curves and budget lines
- Ch 32Efficiency and market failure
- Ch 33Private costs and benefits, externalities and social costs and benefits
- Ch 34Types of cost, revenue and profit, short-run and long-run production
- Ch 35Different market structures
- Ch 36Growth and survival of firms
- Ch 37Differing objectives and policies of firms
- Unit 8Government microeconomic intervention
- Ch 38Government policies to achieve efficient resource allocation and correct market failure
- Ch 39Equity and redistribution of income and wealth
- Ch 40Labour market forces and government intervention
- Unit 9The macroeconomy
- Ch 41The circular flow of income
- Ch 42Economic growth and sustainability
- Ch 43Employment and unemployment
- Ch 44Money and banking
- Unit 10Government macroeconomic intervention
- Ch 45Government macroeconomic policy objectives
- Ch 46Links between macroeconomic problems and their interrelatedness
- Ch 47Effectiveness of policy options to meet all macroeconomic objectives
- Unit 11International economic issues
- Ch 48Policies to correct disequilibrium in the balance of payments
- Ch 49Exchange rates
- Ch 50Economic development
- Ch 51Characteristics of countries at different levels of development
- Ch 52Relationship between countries at different levels of development
- Ch 53Globalisation