Lesson 8.7.1

8.7.1 Economies and diseconomies of scale Quiz: OCR Business, Unit 8

20 questions

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Lesson 8.7.1, Economies and diseconomies of scale: 20 multiple choice questions for the OCR Business (H431), Unit 8: Operations, written with Revision Ninja.

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The 20 questions

  1. What happens to long-run average costs per unit as scale of production increases under economies of scale?

    • They increase
    • They stay constant
    • They decrease
    • They reach zero

  2. Buying raw materials in bulk to secure lower unit prices is which type of internal economy of scale?

    • Technical
    • Managerial
    • Financial
    • Purchasing

  3. Spreading the fixed cost of advanced specialist machinery over large output volumes represents which economy of scale?

    • Risk-bearing
    • Marketing
    • Financial
    • Technical

  4. Obtaining loans at lower interest rates due to lower perceived lending risk is an example of which economy?

    • Commercial
    • Financial
    • Technical
    • Managerial

  5. Which type of economy of scale benefits all firms within a specific industry or geographical area?

    • Diseconomy
    • Internal
    • Financial
    • External

  6. What term describes the lowest output level at which a firm minimises its long-run average costs?

    • Marginal output
    • Maximum capacity
    • Break-even point
    • Minimum efficient scale

  7. Operating in multiple diverse markets to reduce the impact of falling sales in one product area is which economy?

    • Purchasing
    • Risk-bearing
    • Managerial
    • Marketing

  8. Which term describes factors causing a business's average costs per unit to rise as scale increases?

    • Marginal costs
    • External economies
    • Diminishing returns
    • Diseconomies of scale

  9. A firm doubles output to 2,000 units and average cost falls to £8. What is the new total cost?

    • £8,000
    • £16,000
    • £10,000
    • £20,000

  10. Workers in a huge manufacturing plant feel detached, leading to reduced productivity. Which diseconomy of scale is this?

    • Coordination
    • Communication
    • Alienation
    • Technical

  11. A supermarket chain spreads the cost of a nationwide television campaign across 1,000 stores. Which economy is this?

    • Purchasing
    • External
    • Managerial
    • Marketing

  12. A growing firm struggles to monitor and control operations across 50 regional branches. Which diseconomy is this?

    • Communication
    • Technical
    • Coordination
    • Financial

  13. Local universities developing specialist training courses for a regional cluster of software firms is an example of what?

    • Managerial economy
    • External economy
    • Internal economy
    • Diseconomy of scale

  14. Hiring specialist senior managers for distinct corporate departments as production expands is an example of which economy?

    • Commercial
    • Technical
    • Risk-bearing
    • Managerial

  15. Messages taking too long to pass through many management layers in a large firm is which diseconomy?

    • Managerial economy
    • External diseconomy
    • Communication failure
    • Technical breakdown

  16. If average cost per unit remains flat as output increases across a range, the firm experiences:

    • Diseconomies of scale
    • Minimum scale
    • Constant returns
    • Economies of scale

  17. On a standard U-shaped long-run average cost curve, where are internal economies of scale located?

    • At the peak
    • Upward-sloping section
    • Downward-sloping section
    • Beyond MES

  18. Which scenario represents an external diseconomy of scale affecting all firms in a congested industrial city?

    • Worker alienation
    • Management overload
    • Local traffic congestion
    • Higher interest rates

  19. Why might overall unit costs rise even if a growing firm secures larger bulk purchasing discounts?

    • Spreading fixed costs
    • Lower interest charges
    • Specialist managers
    • Severe coordination costs

  20. What is the conventional shape of a long-run average cost curve showing both economies and diseconomies?

    • U-shaped
    • Vertical line
    • Upward sloping
    • Inverted U-shaped

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