Economies of Scale

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  • Created by: 08bstopps
  • Created on: 08-04-14 17:05

1. What do financial economies of scale mean?

  • As the firm gets smaller, financial issues arise
  • Due to the growth of a firm, banks and other lenders charge less interest and negotiate on better terms than with smaller risker firms
  • As the firm expands investment increases
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2. At what point on an average cost curve are firms productively efficient?

  • At the highest point of the stright line graph
  • At the lowest point of the U shape
  • At the lowest point of the straight line graph

3. What are diseconomies of scale?

  • Rising average costs due to the expansion and growth of a firm
  • Falling average costs due to the expansion and growth of a firm
  • Rising average costs due to firms downgrading in size

4. What is managerial economies scale linked to?

  • Linked to external economies of scale
  • Linked to the division and specialisation of labour
  • Linked to the trade union

5. What are economies of scale?

  • More demand with larger firm
  • Lower average costs resulting from the expansion of a firm
  • Higher average costs resulting from the expansion of a firm

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