economies of scale
- Created by: Tom
- Created on: 07-01-14 21:00
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- Economies of Scale
- Definition
- A fall in long run average total costs
- Technical
- indivisability?
- Long run, ATC is lowered due to increased capacity or efficiency
- e.g. a larger plane will be greater productively efficient and will use less fuel ... reducing ATC
- Managerial
- Employment of specialized e.g. managerial staff
- Large firms
- Improves efficiency, lowers ATC
- Small firms
- Do not employ specialized staff as is leads to indivisability
- Financial
- Large firms are seen as lower risk, for loans for investment
- small infant firms are seen as high risk, as they are a start up
- Purchasing
- large firms have a greater purchasing power compared to smaller firms
- Definition
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