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What are some examples of external diseconomies of scale?
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Examples include increased labor costs, congestion, pollution, and higher housing costs.
Differentiate between a Private Limited Company (Ltd) and a Public Limited Company (PLC).
A Private Ltd sells shares privately to a limited number of shareholders, while a PLC sells shares publicly and has a larger shareholder base.
What are the characteristics of public sector firms' natural monopolies, and why are they government-controlled?
Public sector natural monopolies, like utilities, are government-controlled to ensure equitable access and prevent private monopolistic exploitation.
Why might public sector firms not focus on profit maximization?
Public sector firms are government-owned, focusing on providing public goods and welfare rather than profit.
What are the advantages and disadvantages of being a sole trader?
Advantages include full control, ease of setup, and retaining all profits. Disadvantages include limited capital and unlimited liability.
What is meant by internal growth or organic growth for a firm?
Internal growth, or organic growth, refers to expanding a company's production internally, like increasing equipment or premises.
Differentiate between a sole trader and a partnership.
A sole trader has one owner with unlimited liability, while a partnership involves 2-20 partners who share responsibilities and capital.
Explain the concept of economies of scale and give examples of internal economies of scale.
Economies of scale refer to cost advantages as production increases. Examples of internal economies include marketing, managerial, labor, financial, technical, R&D, and risk-bearing economies.
What characterizes a cooperative and what are its types?
A cooperative is owned by members for mutual benefit with equal voting rights. Types include worker cooperatives (employee-owned) and retail cooperatives (bulk buying).
In what ways might a firm be classified by ownership?
Firms may be classified as belonging to the private sector (sole traders, partnerships, limited companies, cooperatives, charities) or the public sector.
What are the reasons a small firm might choose to remain small?
Reasons include a small market size, inability to raise capital, technology minimizing scale needs, and owner preference to keep the business small.
Describe the relationship between firm size and the ability to experience economies or diseconomies of scale.
As firm size increases, it can experience economies of scale (cost per unit decreases), but beyond a point, it may face diseconomies (costs increase due to inefficiencies).
How can external economies of scale benefit an entire industry?
External economies of scale can lead to benefits like improved transport links, better education facilities, supplier development, and access to associated services.
What are diseconomies of scale and how do they differ from economies of scale?
Diseconomies of scale are cost increases due to inefficiencies within a growing firm, unlike economies of scale, which are cost advantages with increased production.
What are the three main sectors by which firms are classified?
Primary, Secondary, and Tertiary sectors.
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