why does the LRAC curve slope downwards
econimies of scale out way diseconimies of scale
why does the LRAC curve slope upwards
diseconomies of scale out way economies of scale
economie of scale
forces at work which lowers the LRAC of production as the firm expands in sise
diseconomie of scale
forces at work which increase the LRAC of production as the firm/ industry expands in sise
list and explain three internal economies of scale
1. increased use of machinery - as a company grow it might be able to buy bigger and more economical machines that would not have suitable when they were producing a smaller unit
2. specialisation of labour - dividing a job into many individual parts allo
list and explain three external economies of scale
1. better infrastructure - as roads and communications systems improve all firms in the industry will benefit
2. availability of training corses - a grater amount of training corses will supply an increased amount of specialised labour and will therefore
list and explain three internal diseconimies of scale
1. poor decision making - as an industry grows the lines of authority become less clearly defined which may result in longer and less efficient decision making than in the past
2. communication problems - as a firm grows in sise effective communication ma
external diseconimies of scale
1. shortage of raw materials
2. shortage of the factors of production - as an industry expands the demand for qualified labour increases which leads to shortages in workers causeing the cost of labour i.e. the wages to increase
3. infrastructural problems