Year 14 Economies and Diseconomies of Scale - Investment and productivity

Chloe, Benjamin, and Oliver are running a lemonade stand. They are trying to understand the concept of Economies of scale. From the options below, identify the best definition of Economies of scale that they can apply to their lemonade stand.

• Economies of scale is the saving in total cost of production or total costs achieved by increased levels of production

• Economies of scale is the saving in average cost of production or unit costs achieved by increased levels of production

• Economies of scale is the saving in average cost of production or unit costs achieved by increased levels of sales. for example buying in bulk

• Economies of scale is the increase in average profits or unit profit achieved by increased levels of production

Aarav, Freya, and Isabelle are running a lemonade stand. They are trying to understand the concept of internal economies of scale. Match the term to the definition of internal economies of scale (1 Point)*

• These arise as Unit costs decrease Due to external factors that benefit all firms in the industry

• These arise as unit costs decreases from the increased output and scale of the business itself

• These arise as average costs increase due to over expansion and coordination and communication problems internally within the business

• These arise with Increased in average costs due to location factors/external factors as the industry grows

Max, Priya, and Thomas are discussing about economies of scale in their business class. They are trying to understand the concept of External economies of scale. Can you help them by matching the term to the correct definition? (1 Point)

• These arise as unit costs decreases from the increased output and scale of the business itself

• These arise as average costs increase due to over expansion and coordination and communication problems internally within the business

• These arise as unit costs decrease due to external factors that benefit all firms in the industry

• These arise with increased in average costs due to location factors/external factors as the industry grows

Jacob, Evie, and Kiara are studying for their economics exam. They are discussing the types of economies of scale. From their discussion, which are the two types of economies of scale they mentioned? * (1 Point)

• Promotion and place

• Purchasing and financial

• Political and technical

• Social and ethical

Arjun and Rohan started a business together. They noticed that as they produced more units, the cost per unit decreased. What is this phenomenon called in economics? * (1 Point)

• Lower unit costs

• Unchanged unit costs

• Higher unit costs

Anaya, Rosie, and James are running a startup. They are discussing how to gain technical economies of scale. Anaya suggests that they can achieve this when *

• they can cut their production costs by introducing up-graded technology or by altering their production methods

• they can borrow money more cheaply or easily because of their larger size and greater security

• they can save on expenses associated with marketing such as advertising or distribution.

• when they can purchase goods in bulk thereby reducing the unit costs

Isla started a small business and she is trying to understand the concept of 'Marketing economies of scale'. Which of the following scenarios best describes this concept? * (1 Point)

• William, who owns a large manufacturing company, cut his production costs by introducing up-graded technology and altering his production methods.

• Mira, who owns a medium-sized business, was able to borrow money more cheaply and easily because of her business's larger size and greater security.

• Isla, who started advertising her products on social media and online platforms, noticed that she could save on expenses associated with marketing such as advertising or distribution.

• A large supermarket chain that purchases goods in bulk, thereby reducing the unit costs.

Rosie, Anaya, and Isabelle are running a startup together. They are considering buying materials in bulk for their production. They believe that purchasing economies of scale are gained when (1 Point)

• they can cut their production costs by introducing up-graded technology or by altering their production methods

• they can borrow money more cheaply or easily because of their larger size and greater security

• they can save on expenses associated with marketing such as advertising or distribution.

• they can purchase goods in bulk, gain discounts and thereby reducing the unit costs

Aarav, Isla, and Chloe are running a startup. They are discussing how to gain financial economies of scale. They realize they can achieve this when * (1 Point)

• they can cut their production costs by introducing up-graded technology or by altering their production methods

• they can borrow money more cheaply or easily because of their startup's growing size and greater security

• they can save on expenses associated with marketing such as advertising or distribution.

• their startup can purchase goods in bulk, gain discounts and thereby reducing the unit costs

Rohan, Amelia, and Priya are discussing about their startup. They are trying to understand how managerial economies of scale can be gained. Rohan suggests that it can be gained when (1 Point)

• their startup can cut its production costs by introducing up-graded technology or by altering its production methods

• their startup can employ specialists to supervise production systems, manage marketing systems and oversee human resources which improves efficiency

• their startup can save on expenses associated with marketing such as advertising or distribution.

• their startup, once grown larger, can purchase goods in bulk, gain discounts and thereby reducing the unit costs