Unit 1 Flashcards
1
Q
What are the factors of production?
A
•Land
•Labour
•Capital
•Enterprise
2
Q
What are Economies of scale?
A
•Benefit of growing
3
Q
What do economies of scale do?
A
•Lowers average cost per unit = lower prices (useful in competitive market)
4
Q
2 Types of economies of scale?
A
•Purchasing - Buy more from suppliers, increase negotiating power w suppliers, help decrease ACPU (bulk buying)
•Technical - Introduce technology into the business which will improve your productivity, make you more efficient
5
Q
What are diseconomies of scale?
A
•What occurs if you grow too rapidly
•ACPU goes up, due to poor communication or coordination bc you got too big
