Economies of scale Flashcards
What are the four types of economies of sacle?
Technical
Managerial
Purchasing
Marketing
What are technical economies of scale?
They are related to production. More advanced machinery leading to less employees needed and lower costs
What are managerial economies of scale?
Large biz can employ mangers with specialist skills. Resulting in work being done more quickly and efficiently
What are purchasing economies of scale?
They are to do with discounts? Big biz can negotiate big discounts for large quantities. They can also borrow at lower interest rates.
What are marketing economies of scale?
Biz with larger output can spread the fixed costs over more units. A large business can also afford more effective forms of advertising
What is an example of external economies of scale?
Having a large number of suppliers to choose from.
Lots of skilled labour, makes industry more efficient.
