Economies and diseconomies of scale

Internal economies of scale are those that

• Result from changes in production techniques

• Increase due to the growth of the industry as a whole

• Generate lower per unit production costs

• Reduce production costs in the short run

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 laborers for a particular industry in a particular area

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

---------- 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

Which of the following is not a cause of internal diseconomies of scale?

• Poor communication between different departments
• Lack of staff morale and motivation
  
• Less control, direction and coordination of human resources
• Late deliveries due to congestion in busy locations

Which of the following is not a suitable method for measuring the size of a firms?

• The number of employees

• the size of the profit

• the amount of capital employed

• the size of turnover

Which of the following is not an advantage of a small firm?

• Better communication

• flexibility

• economies of scale

• a personal service can be offered

Which of the following is a disadvantage of small firms?

• economies of scale

• lack of finance

• too bureaucratic

• poor worker motivation