Economics Unit 3 - EoS

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Explain SR AC increasing returns to scale
Doubling labour will result in output increasing by a factor greater than two, so cost per unit output (AC) decreases
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Explain SR AC diminishing returns to scale
Doubling labour will result in output increasing by a factor less than a factor of two, so cost per unit output (AC) increases
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Distinguish between Diseconomies of scale and diminishing returns
diminishing returns occurs in the SR and is associated with cost increasing from increasing one factor of production, DEos occurs in the LR and is an increase in the cost per unit out (Whole AC curve moving up)
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Examples of EoS
Financial Economies (access to credit), Commercial Economies (Bulk buying/Monopsony Power), Managerial Economies (larger firms attracts more productive employees), Technical Economies (combining shipments, increase of volume)
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Examples of DoS
X-Inefficiency, Communication, Slowness, Unwieldiness (managerial problems), Engagement (lack of employee motivation)
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Other cards in this set

Card 2

Front

Explain SR AC diminishing returns to scale

Back

Doubling labour will result in output increasing by a factor less than a factor of two, so cost per unit output (AC) increases

Card 3

Front

Distinguish between Diseconomies of scale and diminishing returns

Back

Preview of the front of card 3

Card 4

Front

Examples of EoS

Back

Preview of the front of card 4

Card 5

Front

Examples of DoS

Back

Preview of the front of card 5

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