Economies of Scale Quiz

What is the objective of reaping economies of scale?

• To reduce average total costs

• To diversify or close down

• To increase total costs

• To maintain the same level of costs

What are internal economies of scale?

• Cost reductions shared by a whole industry

• Ways in which growth in the size of an industry can cut costs for all the firms

• Cost reductions that benefit an individual firm over local competitors

• Cost reductions that occur within each individual business

What are external economies of scale?

• Cost reductions shared by a whole industry

• Ways in which growth in the size of an industry can cut costs for all the firms

• Cost reductions that benefit an individual firm over local competitors

• Cost reductions that occur within each individual business

What is the minimum efficient scale?

• The highest level of output at which average or unit costs are minimized

• The level of output where the lowest average cost is reached

• The lowest level of output at which average or unit costs are minimized

• The level of output where the highest average cost is reached

What are managerial economies of scale?

• Specialists in management roles as business size increases

• Ways in which growth in the size of an industry can cut costs for all the firms

• Cost reductions shared by a whole industry

• Cost reductions that occur within each individual business

What are financial economies of scale?

• Lower interest rates charged by banks to larger firms

• Cost reductions that occur within each individual business

• Cost reductions shared by a whole industry

• Ways in which growth in the size of an industry can cut costs for all the firms

What are marketing economies of scale?

• Spreading fixed costs across more units of production

• Cost reductions that occur within each individual business

• Ways in which growth in the size of an industry can cut costs for all the firms

• Cost reductions shared by a whole industry

What are technical economies of scale?

• Specialist input that improves the team's performance

• Cost reductions that occur within each individual business

• Ways in which growth in the size of an industry can cut costs for all the firms

• Cost reductions shared by a whole industry

What are bulk-buying economies of scale?

• Cost reductions shared by a whole industry

• Ways in which growth in the size of an industry can cut costs for all the firms

• Cost reductions that occur within each individual business

• Negotiating cheaper input costs for larger firms

What are risk-bearing economies of scale?

• Cost reductions that occur within each individual business

• Offsetting failed innovations against profits from successful projects

• Ways in which growth in the size of an industry can cut costs for all the firms

• Cost reductions shared by a whole industry