3.3.3 economies of scale

Question 1

Technical Economies

Answer 1

Technical economies of scale happen when a company produces goods or services more efficiently by increasing production. This is due to things like specialized labor, better use of machinery, and improved production methods.

Question 2

Managerial Economies

Answer 2

arger firms may benefit from having specialized management teams, better coordination, and more efficient decision-making processes. This can result in cost savings and increased efficiency

Question 3

Marketing Economies:

Answer 3

as firms grow larger, they often have more resources to allocate to marketing and advertising efforts. This can lead to lower advertising costs per unit sold and increased market presence.

Question 4

Financial Economies:

Answer 4

Larger firms may have access to more favorable financing options, including lower interest rates on loans and better terms from suppliers due to their size and financial stability.

Question 5

Risk-Bearing Economies

Answer 5

Larger firms may be better equipped to handle unexpected market fluctuations and risks, reducing the overall cost of risk management.