4.1.4.5 Economies and diseconomies of scale NOTES

What are internal economies of scale primarily associated with?

• Factors within the firm's control

• External industry factors

• Government regulations

• Market demand fluctuations

Which of the following is an example of external economies of scale?

• Decreased production costs due to automation

• Technological advancements within a firm

• Shared transportation networks

• In-house training programs

What typically causes diseconomies of scale?

• Bulk purchasing

• Efficient resource allocation

• Coordination challenges in large firms

• Increased specialization

What does the L-shaped long-run average cost curve indicate?

• Immediate economies of scale

• Constant returns to scale followed by diseconomies

• Decreasing returns to scale throughout

• No change in average costs at any production level

What is the minimum efficient scale (MES) of production?

• The starting level of production for any firm

• The optimal level of output for lowest average costs

• The level of output with maximum diseconomies

• The highest level of output possible

Which factor is a common cause of bureaucratic inefficiencies?

• Specialization in production

• High market demand

• Large organizational structures

• Technological integration

What results from increasing all inputs in a production process?

• No change in output

• Increasing returns to scale

• Decreasing returns to scale

• Constant returns to scale

What does an upward-sloping portion of the long-run average cost curve indicate?

• Economies of scale

• Diseconomies of scale

• Constant returns to scale

• Decreased market competition

Which of the following is not a reason for diseconomies of scale?

• Labor management issues

• Coordination challenges

• Efficient resource allocation

• Bureaucratic inefficiencies

What does the flat portion of the L-shaped long-run average cost curve represent?

• Increasing returns to scale

• Rapid technological change

• Constant returns to scale

• Decreasing returns to scale