Final answer:
Small firms may struggle to make use of efficient capital for several reasons. They often lack a track record of profitability, making it challenging to attract outside investors. Small firms may not have the financial resources within the firm to fund their operations and require external capital. Imperfect information can create uncertainty and make it harder for small firms to secure efficient capital.
Step-by-step explanation:
One reason it is difficult for small firms to make use of efficient capital is that they are often at an early stage of development and have little or no profits. These firms may have an idea or prototype for a product or service, but they haven't demonstrated the ability to earn profits yet.
Another reason is that small firms may lack the financial resources within the firm to make all the desired investments. They need financial capital from outside investors to fund their operations and growth.
Lastly, small firms may face challenges due to imperfect information. Those who are running the firm usually have more information about its future profit potential than outside investors.