ECON Question(Pastpaper)

I give you 3 answers for you to choose:

1. Economies of small scale – Industries which have a low set-up cost and high labour cost content such as hairdressing and toys can only enjoy economies of small scale.
2. As seedbeds of large-scale firms - The small firms may become large firms later
3. Advantages in coordination and morale as the firm is not as complex as large firms and important decisions can be made quickly and problems can be solved immediately.