Economies Of Scale

Question 1

What is economies of scale

Answer 1

Achieved when the cost per unit or product falls as the scale of production increases

Question 2

what is the conclusion gathered from a graph of economies of scale

Answer 2

As output increases average costs fall

Question 3

3 CS in diseconomies of scale

Answer 3

1) poor COMMUNICATION
2) more diffuclt to COORDINATE a larger business
3) lack of COOPERATION from workers/lack of motivation

Question 4

Poor communication within a business happens when a business has

Answer 4

• longer chain of command
• wider span of control

Question 5

how is cooperation In diseconomies shown in a business

Answer 5

• workers may feel isolated and less appreciated in a larger business
• harder for managers to stay in contact with workers

Question 6

How is coordination and in diseconomies shown in a business

Answer 6

• more difficult for managers to supervise their subordinates due to a wider span of control
• managers have to delegate more tasks, meaning less control