3.2

Question 1

diseconomies of scale

Answer 1

the cost disadvantage that accompanies a business when it expands beyond its minimum efficient scale, the costs per unit of output increase

Question 2

economies of scale

Answer 2

the cost advantages that a business can exploit by increasing the scale of production, which leads to a lower cost per unit of output
increasing size or speed - lowers the costs - increases efficiency

Question 3

external economies of scale

Answer 3

the cost reductions available to all businesses as the industry grows

Question 4

internal economies of scale

Answer 4

the cost reductions available by a single business as it grows on its own

Question 5

minimum efficient scale

Answer 5

the minimum number of output that should be produced in order to achieve cost reduction per unit of output - form of cost advantages

Question 6

backward vertical integration

Answer 6

joining with a business in the previous stage of production

Question 7

forward vertical integration

Answer 7

joining with a business in the next stage of production

Question 8

horizontal integration

Answer 8

the joining of businesses that are in exactly the same line of business

Question 9

integration

Answer 9

the joining together of two businesses as a result of a merger or takeover

Question 10

merger

Answer 10

occurs when two (or more) businesses join together and operate as one

Question 11

synergy

Answer 11

the combining of two or more activities or businesses creating a better outcome than the sum of the individual parts

Question 12

takeover

Answer 12

the process of one business buying another

Question 13

vertical integration

Answer 13

the joining of two businesses at different stages of production

Question 14

organic growth

Answer 14

a business growth strategy that involves a business growing gradually using its own resources

Question 15

inorganic growth

Answer 15

a business growth strategy that involves two or more businesses joining together to form a much larger one