Lesson 3.3.3
3.3.3 Economies and diseconomies of scale Quiz: Pearson Edexcel Economics, Unit 3
20 questions
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Lesson 3.3.3, Economies and diseconomies of scale: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.
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The 20 questions
-
What name is given to cost savings arising within an expanding firm?
- Internal diseconomies
- Internal economies
- External economies
- External diseconomies
-
What are cost reductions enjoyed by all firms in a growing industry called?
- External economies
- External diseconomies
- Internal diseconomies
- Internal economies
-
Purchasing economies of scale are achieved through which activity?
- Cheaper borrowing
- Specialised labour
- Bulk buying
- Mass advertising
-
What happens to long-run average costs during diseconomies of scale?
- They remain constant
- They rise
- They fall
- They fluctuate
-
What is the lowest level of output at which long-run average costs are minimised?
- Allocative efficiency
- Maximum capacity
- Minimum efficient scale
- Diminishing returns
-
Which of the following is an internal economy of scale?
- Industry research
- Shared infrastructure
- Technical economies
- Local skilled labour
-
Which of the following is an external economy of scale?
- Risk-bearing economies
- Local supplier network
- Financial economies
- Managerial economies
-
Lower interest rates charged to larger firms illustrate which type of economy of scale?
- Financial
- Marketing
- Managerial
- Technical
-
What cause of diseconomies of scale occurs when communication breaks down in large firms?
- Poor coordination
- Bulk buying
- Specialised labour
- Lower interest rates
-
If doubling all inputs causes output to more than double, what is this called?
- Increasing returns
- Constant returns
- Decreasing returns
- Diminishing returns
-
What market structure is most likely if minimum efficient scale is very high relative to demand?
- Monopolistic competition
- Monopoly
- Perfect competition
- Monopsony
-
Spreading risks across multiple product markets is an example of which economy of scale?
- Risk-bearing
- Technical
- Managerial
- Purchasing
-
Spreading fixed advertising costs over a larger volume of output is an example of which economy?
- External economy
- Financial economy
- Technical economy
- Marketing economy
-
What action allows a large firm to achieve risk-bearing economies of scale?
- Bulk purchasing
- Hiring specialists
- Product diversification
- Cheaper borrowing
-
A firm has total cost TC = 1,000 + 5Q. What is average total cost at Q = 100?
- £5
- £10
- £15
- £150
-
What is occurring when long-run average cost falls as output increases?
- X-inefficiency
- Diseconomies of scale
- Diminishing returns
- Economies of scale
-
What happens to average costs if a firm expands beyond its minimum efficient scale?
- Costs equal zero
- Costs fall continuously
- Revenue doubles
- Costs increase
-
Minimum efficient scale is 20,000 units and market demand is 60,000 units. How many firms could operate at MES?
- Six firms
- Sixty firms
- One firm
- Three firms
-
Why might a small firm be unable to benefit from advanced machinery?
- Low tax rates
- High interest rates
- Excess market demand
- Capital indivisibility
-
Under what condition might lower average costs from economies of scale fail to lower consumer prices?
- High monopoly power
- Low barriers
- Perfect competition
- Elastic demand
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