external economies of scale

Question 1

What are the 4 external economic of scale

Answer 1

Infrastructure
Skilled labour
Research and development
Suppliers

Question 2

Infrastructure:

Answer 2

A firm may benefit from external economies of scale if it is located in an area with well-developed infrastructure, such as roads, ports, and airports, which can reduce the cost of transportation andlogistics.

Question 3

Skilled labour:

Answer 3

A firm may benefit from access to a pool of skilled labor in a particular region, which can reduce the cost of hiring and trainingemployees.

Question 4

Research and development:

Answer 4

A firm may benefit from external economies of scale if it is located in an area with a strong research and development ecosystem, which can provide access to new technologies and knowledge that can be used to improve the firm’s products or processes. Links with the research departments of local colleges and universities can beimportant.

Question 5

Suppliers:

Answer 5

A firm may benefit from external economies of scale if it is able to negotiate favorable terms with suppliers due to its large size or purchasing power. This can result in lower raw material costs, which can reduce the overall cost ofproduction.