Economies and Diseconomies of Scale Flashcards
1
Q
How do economies of scale arise?
A
Economies of scale arise when unit costs fall as production rises.
2
Q
What is the equation for average cost per unit?
A
Total Production costs in period/total output in period.
3
Q
What is internal economies of scale?
A
Arises from the increased production of the company itself.
4
Q
What is external economies of scale?
A
Arises when the industry increases overall.
