Economies of Scale

Front

Fill in the blank. Economies of scale is when as output _________, unit costs ________ in the long run.

Back

increases; decrease

Front

Internal economies of scale are those that

Back

Generate lower per unit production costs

Front

Internal diseconomies of scale can be caused by: Being unable to purchase stocks at a discounted price, Management control being weakened with a larger workforce, Traffic congestion causing delays to delivery of important stocks, Advertising costs to a global audience

Back

Management control being weakened with a larger workforce

Front

Which of the following is not a cause of internal diseconomies of scale?
Options: Poor communication between different departments, Lack of staff morale and motivation
, Less control, direction and coordination of human resources, Late deliveries due to congestion in busy locations

Back

Late deliveries due to congestion in busy locations

Front

Larger firms are better able to diversify into a range of product areas or markets and thus lessen their risk. This is an example of

Back

Risk bearing economies of scale

Front

Large firms can afford to advertise and sell in larger quantities to develop brand loyalty. This is an example of

Back

Marketing economies of scale

Front

Large firms can negotiate better interest rates on loans; this reduces the costs of borrowing for larger companies. This is an example of

Back

Financial economies of scale

Front

Large firms can buy raw materials in bulk at more favourable rates. This is an example of

Back

Purchasing economies of scale

Front

Fill in the blank. __________ economies of scale occur due to an increase in the scale of production within a single firm

Back

Internal

Front

Larger firms can hire specialists (e.g. managers, accountants) and are therefore able to increase productivity. This is an example of

Back

Managerial economies of scale