Economies and diseconomies of scale Flashcards
(8 cards)
1
Q
How to decrease AC?
A
Economies of scale
2
Q
What are economies of scale?
A
economies of scale are the cost advantages that enterprises obtain due to their scale of operation
3
Q
What are types of economies of scale?
A
Internal
External
4
Q
What are internal economies?
A
Technical
Purchasing
Managerial
Financial
Risk-Bearing
Marketing
5
Q
What are external economies of scale?
A
Changes outside of the firm
6
Q
What can successful economies of scale lead to?
A
Monopoly as AC falls
7
Q
What are the diseconomies of scale?
A
Wastage
Communication
Managerial loss
Them vs Us attitude
Higher raw materials price
8
Q
What do economies of scale lead to?
A
High fixed costs
