(dis)Economies Of Scale

Question 1

Causes of economies of scale

Answer 1

Output increasing - bulk buying
Operational efficiency- technological
Management quality increasing- managerial

Question 2

Causes of diseconomies of scale

Answer 2

Waste - too high output

Poor communication

Alienation- decreased motivation

Question 3

Internal economies of scale

Answer 3

Caused by factors within the firm

Increased production
Technological advancements
Managerial changes

Question 4

External economies of scale

Answer 4

Factors outside of the firm

Industry growth
Improved infalstruture

Question 5

Marginal cost formul

Answer 5

Change in costs/ change in quantity produced

Question 6

Short run

Answer 6

One factor of production is fixed (capital)

Question 7

Long run

Answer 7

All FOP are variable

Question 8

Marginal revenue

Answer 8

Change in cost / change in quantity sold(output)

Question 9

Marginal cost

Answer 9

Change in total cost / change in quantity

Question 10

Normal profit and supernormal

Answer 10

Normal - enough to cover total costs

Supernormal exceeds Tc