Lower long run average costs a company receives as a benefit of growing in size.
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Buying economies
A benefit of internal economies of scale. The buyer receives discount on being in bulk as the seller ways to keep their customer coming for more.
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Selling economies
A benefit of internal economies of scale. The total cost of processing orders, packaging and delivering does not increase with the number of goods. In fact, advertisement costs may be reduced.
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Managerial economies
Large firms can afford to invest in specialized staff. This can benefit their efficiency and production.
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Financial economies
Lenders will be more willing to finance large businesses as they can pay the loans and grants back.
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Technical economies
The larger the output of the firm, the more viable it becomes for it to invest in technologically advanced machinery.
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Research and development economies
A large firm can carry out market research and develop its goods and services just how consumers want them.
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External economies of scale
Lower long run average costs resulting from an industry growing in size
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Internal diseconomies of scale
Higher long run average costs as a result from a firm growing too large in size.
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External diseconomies of scale
Higher long run average costs as a result of an industry growing too large in size.
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Other cards in this set
Card 2
Front
Buying economies
Back
A benefit of internal economies of scale. The buyer receives discount on being in bulk as the seller ways to keep their customer coming for more.
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