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ECON1020 > Week 8 - Consumers and Firms > Flashcards

Week 8 - Consumers and Firms Flashcards

1
Q

Why do large firms experience growth?

A

Economies of scale - the phenomenon when technology is able to increase outputs more than proportionally to the increase in inputs

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2
Q

What two factors drive EOS?

A
  1. Cost Advantages - Large firms have greater bargaining power in negotiations with suppliers
  2. Demand Advantages - Large firms can harness network effects whereby the value of their product increases with increasing users
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3
Q

What is marginal cost?

A

The effect on total cost of producing an additional unit of output.

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ECON1020 (10 decks)

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