Lesson 5

Question 1

Economies of scale

Answer 1

Occur for a firm when an increase in the scale of production leads to production at lower long-run average cost

Question 2

Internal economies of scale

Answer 2

Economies of scale that arise from the expansion of a firm

Question 3

external economies of scale

Answer 3

economies of scale that arise from the expansion of the industry in which a firm is operating

Question 4

technical efficiency

Answer 4

attaining the maximum possible output from a given set of inputs

Question 5

cost efficiency

Answer 5

the appropriate combination of inputs of factors of production , given the relative prices of those factors