econ

• What are internal economies of scale?

  Cost advantages as a firm grows larger
• What mnemonic helps remember examples of internal economies of scale?

  Really Fun Mums Try Making Pies
• How do average costs of production change with increased output?

  They fall as output increases
• What is risk-bearing in the context of internal economies of scale?

  Spreading costs of uncertainty across production
• Why do banks lend more cheaply to larger firms?

  They are deemed less risky
• How do larger firms benefit from managerial economies of scale?

  They can specialize and divide labor effectively
• What technological advantage do larger firms have?

  Ability to invest in advanced machinery
• How do larger firms benefit from marketing economies of scale?

  Lower average cost of advertising per unit
• What purchasing advantage do larger firms have?

  Ability to bulk-buy for lower costs
• What are external economies of scale?

  Cost advantages occurring within the industry
• How can local infrastructure improvements affect industries?

  They can lower transport costs for local industries
• What is the long run average cost curve (LRAC)?

  It shows average costs as output changes
• What happens to average costs after the optimum level of output?

  They begin to rise due to diseconomies of scale
• What is the minimum efficient scale?

  The point of lowest LRAC
• How does market power relate to large firms?

  They can set prices and deter new entrants
• What is monopsony power?

  Ability to buy stock at lower prices
• How can a firm gain competitive advantage?

  Through price, quality, cost, or niche market
• What is a cost competitive advantage?

  Lowering average costs to create value
• Why is it hard to maintain a cost competitive advantage?

  Firms must offer additional benefits beyond price
• How does brand loyalty affect demand?

  It makes demand more inelastic
• What is the profit motive for growing firms?

  Opportunity to earn higher profits
• What are diseconomies of scale?

  Increased average costs after a certain output level
• What control issues arise from growth?

  Harder to monitor workforce productivity
• How does coordination become complicated in large firms?

  More employees make coordination difficult
• What communication issues can arise in larger firms?

  Workers may feel alienated and excluded
• What impact can skills shortages have on firms?

  They can increase wages and reduce productivity
• What does corporate culture include?

  Shared values, beliefs, and norms of a firm
• How can a strong corporate culture affect a firm?

  It can enhance productivity and loyalty
• What is an example of a company known for strong corporate culture?

  Google
• The economy is the sum total of all economic activity within a country.
• Gross Domestic Product (GDP) measures the value of all final goods and services produced by an economy during a specific period.
• Economic growth refers to an increase in real GDP over time, indicating that more goods and services are being produced.
• Unemployment occurs when individuals who want work cannot find jobs or have been laid off.
• Unemployment occurs when individuals are willing and able to work but cannot find employment.
• Inflation is the rate at which prices rise over time, measured as the percentage change in the price level from one year to another.
• Inflation is the persistent rise in prices across the economy.
• Inflation is the general rise in prices across the economy.
• Economic growth refers to the sustained expansion of production output over time.
• Gross Domestic Product (GDP) measures the value of goods and services produced by a nation's residents during a specific period.
• Economic growth refers to the rate at which the economy expands over time.