Understanding Economies of Scale
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Questions and Answers

What is the term for the financial advantages of producing something in very large quantities?

  • Economies of scale (correct)
  • Internal economies of scale
  • External economies of scale
  • Diseconomies of scale

What can discourage businesses from growing too big due to rising average costs?

  • Ancillary services
  • Internal economies of scale
  • Diseconomies of scale (correct)
  • External economies of scale

In what manner does a firm grow when it merges with another?

  • Economies of scale
  • Vocational training
  • Take over (correct)
  • Internal expansion

What is the term for the rising average costs when a firm becomes too large?

<p>Diseconomies of scale (C)</p> Signup and view all the answers

Which factor would not typically limit a business from growing in size?

<p>Internal economies of scale (A)</p> Signup and view all the answers

What type of services are connected with but less important than the main part of something?

<p>Ancillary services (A)</p> Signup and view all the answers

What is the main benefit of economies of scale for a firm?

<p>Decreased average costs as output increases (D)</p> Signup and view all the answers

Which of the following is an example of an internal economy of scale?

<p>Purchasing in bulk to reduce costs (B)</p> Signup and view all the answers

What can lead to diseconomies of scale for expanding firms?

<p>Miscommunication arising from a complex hierarchy (C)</p> Signup and view all the answers

Which factor can contribute to reducing unit costs in economies of scale?

<p>Using previously purchased ingredients efficiently (B)</p> Signup and view all the answers

What is the difference between internal and external economies of scale?

<p>Internal EOS arise from business growth, while external EOS occur within an industry (D)</p> Signup and view all the answers

How can large organizations overcome the challenge of ineffective communication in relation to economies of scale?

<p>Implement strategies to enhance communication efficiency (D)</p> Signup and view all the answers

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