IGCSE Economies and Diseconomies of Scale

Diseconomies of Scale result in a lower per unit production cost over the long run

• True

• False

Internal diseconomies of scale can be caused by

• Being unable to purchase stocks at a discounted price

• Poor management being unable to effectively control a large workforce

• Traffic congestion causing delays to delivery of important stocks

• Advertising costs to a global audience

External economies of scale can arise from

• Bulk purchases of raw materials, parts and components at favorable prices by a particular business/firm

• Purchase and use of physical/human capital by a particular business/firm

• Greater availability of skilled labourers for a particular industry in a particular area

• A business/firm being able to obtain lower interest rates on loans

External economies of scale are cost savings available to the whole ________ as a result of its __________.

• Industry, Location
• Business, Location
  
• Industry, Size
• Business, Size

---------- resulting from a firm growing too large.

• External Diseconomies
• Internal Diseconomies
• Internal Economies
• External Economies

Machinery is likely to be efficient. what economies it indicate?

• Financial Economies
• Buying Economies
• Technical Economies
• Managerial Economies

Employing specialist cost accountant in a growing business is an example of which type of internal economies of scale?

• technical economies of scale

• risk bearing economies of scale

• Managerial economies of scale

• marketing economies of scale

Internal economies of scale affect costs how?

• falling total costs

• rising average costs

• rising variable costs

• falling average costs

What are external economies of scale?

• cost benefits that an individual firm can enjoy when it expands

• buying goods in large quantities, which is usually cheaper than buying in small quantities

• cost benefits that all firms in an industry can enjoy when the industry expands

• rising average costs when a firm becomes too big

What are diseconomies of scale?

• size of a business

• falling average costs due to expansion

• rising average costs when a firm becomes too big

• cost benefits that all firms in an industry can enjoy when the industry expands