economies of scale

Question 1

internal economies of scale

Answer 1

-risk bearing
-financial
-managerial
-technical
-marketing
-purchasing

Question 2

risk bearing economies of scale

Answer 2

as firms grow, they spread out their risk over a larger range of output

Question 3

financial economies of scale

Answer 3

banks will give firms lower rates of interest on loans as they have increased confidence it will be paid back, the larger they are

Question 4

managerial economies of scale

Answer 4

as firms get larger they can employ specialised managers who boost productivity and bring in skills

Question 5

technical economies of scale

Answer 5

specialist machinery or more workers can be added to increase productivity. this increases costs but output should increase at a faster rate

Question 6

marketing economies of scale

Answer 6

bulk buying advertisement so its cheaper

Question 7

purchasing economies of scale

Answer 7

bulk buying raw materials so its cheaper

Question 8

external economies of scale

Answer 8

-better transport infrastructure
-component suppliers move close
-R&D firms move closer

Question 9

DISeconomies of scale (3Cs and an M)

Answer 9

-loss of control
-loss of communication
-loss of coordination
-loss of motivation