Micro Definitions

Question 1

Short Run

Answer 1

Where there is at least one fixed cost of production

Question 2

Law of diminishing returns

Answer 2

States that in the short run when variable factors of production are added to a stock of fixed factors of production total/marginal product will initially rise and then fall

Question 3

Really
Fun
Mums
Try
Making
Pies

Answer 3

Internal Economies of Scale
Risk Bearing
Financial
Managerial
Technical
Marketing
Purchasing

Question 4

Managerial Economies of Scale

Answer 4

1. As a firm gets larger they can employ specialist managers
2. > > A boost in the productivity of the workforce

Question 5

Technical Economies of Scale

Answer 5

Bringing in specialist machinery&raquo_space; Boosts productivity

Bringing in more workers and having them specialise&raquo_space; Boosts productivity

Question 6

Purchasing Economies of Scale

Answer 6

A firm is able to buy in bulk&raquo_space; Unit discounts