Corporations Although there are many small and medium-sized companies, big business units play a dominant role in the American economy. There are several reasons for this. Large companies can supply goods and services to a greater number of people, and they frequently operate more efficiently than small ones. In addition, they often can sell their products at lower prices because of the large volume and small costs per unit sold. They have an advantage in the marketplace because many consumers are attracted to well-known brand names, which they believe 45

guarantee a certain level of quality. Large businesses are important to the overall economy because they tend to have more financial resources than small firms to conduct research and develop new goods. And they generally offer more varied job opportunities and greater job stability, higher wages, and better health and retirement benefits. Nevertheless, Americans have viewed large companies with some ambivalence, recognizing their important contribution to economic well-being but worrying that they could become so powerful as to stifle new enterprises and deprive consumers of choice. What's more, large corporations at times have shown themselves to be inflexible in adapting to changing economic conditions. In the 1970s, for instance, U.S. auto-makers were slow to recognize that rising gasoline prices were creating a demand for smaller, fuel-efficient cars. As a result, they lost a sizable share of the domestic market to foreign manufacturers, mainly from Japan.