A. What is economic of scale?
B. Outline three internal economies of scale a firm can enjoy
C. State three factors that can influence where a firm is sited
A. Economics of scale is the amount of factors used, the quantities of product produced and the techniques of production adopted by
a producer. It is also known as scale of production.
B. - Technical economies: In large scale of production, huge and modern machines are used and production increased with a little
increase in costs
- Managerial economies: Managerial specialization is also possible when the scale of production is large. Increased production, the
marginal costs are distributed over a wide range
- Financial economies: These are large firms which have a market reputation due to their assets and properties and volume of
production.
C. - Nearness to market
- Workforce
- Transport availability
- Availability of power
- Nearness to source of raw materials
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