Micro 9

Question 1

What is the long run ?

Answer 1

all factors of production are variable

Question 2

What is the short run?

Answer 2

at least one factor of production is fixed

Question 3

How can firms increase output ?

Answer 3

by adding more of one of their factors ( getting more stuff ) in short run and in long run getting more for everything

Question 4

What is the law of diminishing returns ?

Answer 4

if one factor of production is increased ( labour )when another is fixed ( capital ) then the productivity of the variable factor will decrease , only in the short run as at least one factor is fixed.

Question 5

What is economies of scale ?

Answer 5

if you buy in bulk AC goes down .or division of labour ( specialised )

Question 6

What is diseconomies of scale ?

Answer 6

When a company or business grows so large that the costs per unit increase.

Question 7

What is internal economies of scale ?

Answer 7

occur due to an increase in the scale of production of a firm

Question 8

What is external economies of scale ?

Answer 8

occur due to an increase in the scale of production within the industry in which the firm operates.

Question 9

What are the factors of internal EOS

Answer 9

Risk bearing
Financial
Managerial
Technical
Marketing
Purchasing

Question 10

What are the factors of external EOS ?

Answer 10

Training
Research
Infrastructure
Education
Development

Question 11

What are the factors of diseconomies of scale ?

Answer 11

Control
Coordianton
Communication