WorksheetsIB Business Management - 1.5.1 Economies of Scale Quiz
Total questions: 20
Worksheet time: 7mins
Which of the following is an example of a technical economy of scale?
Bulk buying of raw materials
Specialized machinery reducing per-unit production costs
Improved marketing strategies
Increased borrowing capacity
How does managerial economies of scale reduce costs for a large firm?
By allowing better advertising rates
By reducing the need for skilled labor
By employing specialized managers to increase efficiency
By outsourcing all non-core activities
Purchasing economies of scale occur when:
A firm increases the number of products produced.
A firm negotiates lower prices for bulk buying of materials.
A firm invests in inexpensive, high-tech machinery.
A firm raises funds from a larger group of shareholders.
Which of the following best describes financial economies of scale?
Larger firms can secure loans at lower interest rates due to perceived lower risk.
Larger firms sell products at higher prices.
Smaller firms have better access to financial resources.
Larger firms increase their product prices to secure financing.
Which of the following is an example of risk-bearing economies of scale?
A large firm diversifying into different markets to spread risk.
A firm producing a wider variety of products.
A small business buying raw materials in bulk.
A business reducing the price of its products to increase demand.
A large manufacturing firm benefiting from the ability to spread advertising costs over a greater number of units is an example of:
Marketing economies of scale
Financial economies of scale
Purchasing economies of scale
Risk-bearing economies of scale
External economies of scale occur when:
Firms in an industry benefit from lower production costs due to industry-wide factors.
Firms reduce costs by internal efficiencies.
Individual firms lower costs by increasing production.
Firms collaborate with competitors.
Which of the following is an example of external economies of scale?
A firm increasing its output
Government investment in local infrastructure, benefiting all businesses in the area
A firm buying raw materials at discounted prices
Outsourcing production to cheaper suppliers
Which of the following could lead to external economies of scale for an industry?
Improved education and training facilities in the region
Hiring more skilled managers
Bulk purchasing raw materials
Investing in more efficient machinery
External economies of scale are likely to benefit firms located in:
Isolated rural areas
Competitive industries with many small firms
Industrial clusters where firms share resources and knowledge
Markets with high barriers to entry
Which of the following describes a potential source of external economies of scale?
Improved transport networks in a region
Increased advertising by a single firm
Decreasing wages across the industry
Hiring cheaper labor
How can technological advancements within an industry lead to external economies of scale?
By lowering the cost of new machinery for individual firms
By increasing demand for a firm's products
By reducing the market size for competitors
By creating industry-wide improvements that benefit all firms
Internal diseconomies of scale occur when:
A firm grows too large and inefficiencies increase its average costs.
An industry grows and individual firms benefit from lower costs.
Smaller firms in the market cannot compete with larger firms.
Larger firms reduce costs through bulk purchasing.
Which of the following is a common cause of internal diseconomies of scale?
Over-specialization of labor
Higher borrowing costs for large firms
Poor communication and coordination in large organizations
Increased demand for a firm’s product
As a company grows larger, decision-making can become slower and more bureaucratic. This is an example of:
Technical economies of scale
Financial economies of scale
Internal diseconomies of scale
External economies of scale
Internal diseconomies of scale can result from:
Decreased average costs per unit
Increased difficulty in managing a large workforce
Better financial conditions for the company
Improved organizational efficiency
A firm experiencing an increase in labor turnover and absenteeism as it grows larger is likely suffering from:
External economies of scale
Internal diseconomies of scale
External diseconomies of scale
Technical economies of scale
External diseconomies of scale occur when:
The industry grows too large, causing rising costs for all firms within it.
Firms lower costs through innovation.
A firm experiences higher costs due to internal inefficiencies.
Smaller firms cannot compete with larger firms.
Which of the following is a cause of external diseconomies of scale?
Traffic congestion in an area with many firms, increasing transportation costs
A firm expanding production and lowering average costs
An increase in raw material prices due to higher demand
Improved communication between firms in the same industry
External diseconomies of scale are likely to occur when:
An industry becomes too concentrated in one area, increasing competition for resources.
Firms benefit from government subsidies.
Firms operate in isolation and don't share infrastructure.
There is a reduction in the number of firms in the industry.
