Unit 1

Question 1

What are the factors of production?

Answer 1

•Land
•Labour
•Capital
•Enterprise

Question 2

What are Economies of scale?

Answer 2

•Benefit of growing

Question 3

What do economies of scale do?

Answer 3

•Lowers average cost per unit = lower prices (useful in competitive market)

Question 4

2 Types of economies of scale?

Answer 4

•Purchasing - Buy more from suppliers, increase negotiating power w suppliers, help decrease ACPU (bulk buying)

•Technical - Introduce technology into the business which will improve your productivity, make you more efficient

Question 5

What are diseconomies of scale?

Answer 5

•What occurs if you grow too rapidly
•ACPU goes up, due to poor communication or coordination bc you got too big