D2 Economies of Scale

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

• increases; decrease

• increases; increase

• decreases; increase

• decreases; decrease

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

• Internal

• External

• Complex

• Simple

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

• Purchasing economies of scale

• Technical economies of scale

• Managerial economies of scale

• Marketing economies of scale

• Risk bearing economies of scale

Large firms can take advantage of investing in better machinery and can benefit from the division of labour. This is an example of

• Purchasing economies of scale

• Technical economies of scale

• Managerial economies of scale

• Marketing economies of scale

• Risk bearing economies of scale

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

• Purchasing economies of scale

• Technical economies of scale

• Managerial economies of scale

• Marketing economies of scale

• Risk bearing economies of scale

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

• Purchasing economies of scale

• Technical economies of scale

• Managerial economies of scale

• Marketing economies of scale

• Risk bearing economies of scale

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

• Financial economies of scale

• Technical economies of scale

• Managerial economies of scale

• Marketing economies of scale

• Risk bearing economies of scale

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

• Financial economies of scale

• Technical economies of scale

• Managerial economies of scale

• Marketing economies of scale

• Risk bearing economies of scale