Economies And Diseconomies Of Scale

Question 1

Economies of scale is

Answer 1

The cost advantages of producing on a large scale.

Question 2

Economies of scale can be

Answer 2

Internal or external

Question 3

Internal economies of scale involve

Answer 3

Changes within a firm

Question 4

External economies of scale involve

Answer 4

Changes outside a firm.

Question 5

What does undercutting mean?

Answer 5

Selling something at a lower price

Question 6

Extremely successful companies can

Answer 6

Gain monopoly power in a market.

Question 7

Diseconomies of scale is

Answer 7

The disadvantages of being big.

This can be internal and external.

Question 8

Diseconomies of scale internal

Answer 8

Wastage and loss can increase.

Communication might become more difficult.

Managers less able to control.

More difficult to coordinate activities between different divisions.

Them and us attitude.

Question 9

Diseconomies of scale external

Answer 9

Whole industry price of raw materials greater (demand greater)

Buying large amounts of material may not make them less expensive per unit.

Question 10

High fixed costs create

Answer 10

Large economies of scale.