Questions and Answers
What happens when input costs constitute a smaller share of average cost?
Economies of scale decrease
In process innovations where a labour-intensive process is replaced by a capital-intensive process, what happens to marginal costs?
Marginal costs increase
What type of innovation generates economies of scope?
Innovation reducing marginal costs
How does a reduction in fixed costs affect average cost?
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What happens to economies of scale when fixed costs decrease?
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What defines a pure process innovation?
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How might a process innovation impact the product?
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What is the effect of a reduction in fixed costs with no change in marginal costs?
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What characterizes a basic capital-saving innovation?
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How does a reduction in marginal costs accompanied by an increase in fixed costs affect a company's chances in the market?
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