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- 1. Multiple ChoiceInternal diseconomies of scale can be caused byBeing unable to purchase stocks at a discounted priceManagement control being weakened with a larger workforceTraffic congestion causing delays to delivery of important stocksAdvertising costs to a global audience
- 2. Multiple ChoiceWhich of the following is not a cause of internal diseconomies of scale?Poor communication between different departmentsLack of staff morale and motivationLess control, direction and coordination of human resourcesLate deliveries due to congestion in busy locations
- 3. Multiple ChoiceIf a firm increases its use of all factors of production but sees an increase in its average costs, this is a sign ofInternal diseconomies of scaleExternal returns to scaleDiminishing marginal returnsDecreasing returns to scale
- 4. Multiple ChoiceInternal economies of scale are those thatResult from changes in production techniquesIncrease due to the growth of the industry as a wholeGenerate lower unit costsReduce production costs in the short run
- 5. Multiple ChoiceExternal economies of scale can arise fromBulk purchases of raw materials, parts and components at favourable pricesThe introduction and use of advanced technologySpecialised back-up services available in a particular regionLower interest rates, thus reducing the cost of borrowing to large companies
- 6. Multiple ChoiceExternal economies of scale are cost savings available to the whole ________ as a result of its __________.Industry, LocationBusiness, LocationIndustry, SizeBusiness, Size
- 7. Multiple ChoiceIf a firm doubles its use of inputs and finds that output increases by 50%, then it has experiencedGrowthEconomies of scaleDiseconomies of scaleEvolution
- 8. Multiple ChoiceIf a firm increases its use of all factors of production but sees an increase in its average costs, this is a sign ofInternal diseconomies of scaleExternal diseconomies of scaleExternal economies of scaleExternal diseconomies of scale
- 9. Multiple ChoiceTechnological economies of scale can only be feasible for a business ifBanks lend money for the purchase of highly expensive technologyCapital equipment is capable of producing mass units of a product in a short timeThere is an economic boomThere is sufficient market demand for the product
- 10. Multiple Choice
The output range in region "c" is associated with......Economies of ScaleInternal economies of ScaleInternal diseconomies of ScaleDiseconomies of Scale - 11. Multiple ChoiceEconomies of scale can only be achieved in....Long RunShort run
- 12. Multiple ChoiceThe main difference between the SR and the LR is thatthe law of diminishing returns applies in the LRall resources are variable in the LRfixed costs are more important to decision making in the LRin the SR all resources are fixed
- 13. Multiple ChoiceWhich cost curves are these?ATC, MC, AFC, AVCMC, ATC, AVC, AFCAFC, MC, AVC, ATCATC, AVC, AFC, MC
- 14. Multiple ChoiceIn this chart, curves 1, 2, & 3 representAVC, MC, AVCTC, TFC, TVCTC, TVC, TFCATC, AVC, MP
- 15. Multiple ChoiceWhen MP reaches the point of diminishing returns, MC isalso at its highest pointintersects AVCintersects ATCis at its lowest point
- 16. Multiple ChoiceAs the firm in the above diagram expands from plant size 1 to 3 in the LONG RUN, it experiences...diminishing returnseconomies of scalediseconomies of scaleconstant costs
- 17. Multiple ChoiceWhen diseconomies of scale occur:the long-run ATC curve fallsMC intersects ATCthe long-run ATC curve risesaverage fixed costs will rise
- 18. Multiple ChoiceThe long-run ATC curve:will rise if there are diminishing returnswill fall if there are diminishing returnswill rise if economies of scale are incurredis based on the assumption that all resources are variable
- 19. Multiple ChoiceDiseconomies of scale arise primarily because:the SR ATC rises when MC increasesof difficulties in managing a large businessfirms must be large relative to the market to employ efficient production techniquesMP declines as more units of a variable input are added to a fixed input
- 20. Multiple ChoiceA cost that cannot be partly or fully recovered through any subsequent action is known as aopportunity costfixed costexternal costsunk cost
- 21. Multiple ChoiceA cost that cannot be partly or fully recovered through any subsequent action is known as aopportunity costfixed costexternal costsunk cost
- 22. Multiple ChoiceIf the % change in output > the % change in input, the firm is experiencingdecreasing returnsconstant returnsincreasing returnsdiminishing returns
- 23. Multiple ChoiceIf a firm increases its labor & capital inputs by 15% and this leads to a 12% increase in output, the firm is experiencing a...economy of scaleconstant returnsdiseconomy of scalediminishing returns
- 24. Multiple Choice
Minimum efficient scale (MES) is the scale of output where
internal economies of scale has been fully exploited
external economies of scale has been fully exploited
LRAC is at its lowest
internal economies of scale has been fully exploited
None of the above
- 25. Multiple Choice
External economies of scale occurs
within a firm
outside a firm and within a society
within a firm and the industry
outside a firm and within an industry
when MES is at its minimum
- 26. Multiple Choice
Production technology is
the method of production a firm employs
the specific combination of labour, physical capital, and technology that makes up a particular method of production
a falling LRAC
the automated output of a firm
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