Theory of Cost and Economies of Scale Flashcards
1
Q
What is Cost?
A
Cost may be defined as the monetary value of all sacrifices
made to achieve an objective
2
Q
What are some cost determinants?
A
Level of Output
Price of Input
State of technology
3
Q
Define economies of scale
A
the reduction in average costs of production that occur as a business increases its scale of production
4
Q
What are the internal economies of scale?
A
Purchasing
Financial
Marketing
Managerial
Technical
5
Q
What are the external economies of scale?
A
Financial services
Supplier
Educational
