Economies and Diseconomies of Scale (AQA A-Level Economics): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
What happens to long-run average costs when a firm experiences economies of scale?
What happens to long-run average costs when a firm experiences economies of scale?
They fall as the firm grows
When do diseconomies of scale occur?
When do diseconomies of scale occur?
When firm grows beyond optimal size
What causes internal economies of scale?
What causes internal economies of scale?
Changes in size of individual firm
What happens to capacity when a storage tank doubles in size across its three dimensions?
What happens to capacity when a storage tank doubles in size across its three dimensions?
Capacity increases eightfold
Why can large firms borrow at lower interest rates than small firms?
Why can large firms borrow at lower interest rates than small firms?
Seen as less risky by lenders
What problem occurs when there are too many layers of management in large firms?
What problem occurs when there are too many layers of management in large firms?
Communication failure
What does the left-hand side of the LRAC curve represent?
What does the left-hand side of the LRAC curve represent?
Economies of scale
What is the Minimum Efficient Scale (MES)?
What is the Minimum Efficient Scale (MES)?
Output where LRAC reaches minimum
When LRMC is below LRAC, what happens to the LRAC curve?
When LRMC is below LRAC, what happens to the LRAC curve?
LRAC falls
What benefits do firms gain from cluster effects in external economies of scale?
What benefits do firms gain from cluster effects in external economies of scale?
Access to skilled labour pool