Economies of Scale

Question 1

What are the four types of economies of scale?

Answer 1

purchasing
marketing
administrative
research and development

Question 2

What is purchasing economies of scale

Answer 2

when large businesses often recieve a discount because they are buying in bulk

Question 3

what is marketing economies?

Answer 3

spreading the fixed costs of promotion over a larger level of output

Question 4

what are administrative economies

Answer 4

spreading the fixed costs of managment staff and IT systems over a larger level of output

Question 5

what are research and development economies?

Answer 5

spreading the fixed costs of developing new or imporved products over a larger level of output

Question 6

what are the disadvantages to large businesses?

Answer 6

ineffective communication- cooridinating larger numbers of people is difficult.
reduced motivation- staff can feel unappreciated- staff productivity reduces