Th3.3: ^^ Technical Economies

Question 1

Why do technical economies arise?

Answer 1

these arise as a result of what happens to the production process

Question 2

Specialisation

Answer 2

large firms will be able to appoint specialist workers and buy specialist machines which will be able to do their jobs more quickly and better than machines/workers which are not specialised

Question 3

Balanced teams of machines

Answer 3

large firms can afford to buy a number of every kind of machine for each stage of production. by combining these machines, they can ensure they run each machine at its optimal level - smaller companies may only be able to afford one for each stage

Question 4

Increased dimensions

Answer 4

relates to the fact that if you double the size of the walls you can increase the area by four times, or if you double the size of a container you increase the amount it can carry by more than double - all occurs without doubling the cost

Question 5

Indivisibility of Capital

Answer 5

some processes require huge items of machinery and investment that it makes it only possible for them to produce on a large scale

Question 6

Research and development

Answer 6

often it is only large firms that can afford to carry out large scale research and development, which means they are able to gain a large advantage over their competitor