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Learning objective

Understand how internal and external economies and diseconomies of scale impact a firm or industry as production levels change.

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  • Practise with linked questions.
Cambridge IGCSE EconomicsSubject content

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Quick explanation

Understand how internal and external economies and diseconomies of scale impact a firm or industry as production levels change

  • This point belongs to Firms, especially Firms outcomes.
  • You need to be able to understand how internal and external economies and diseconomies of scale impact a firm or industry as production levels change.
  • The key ideas to know are Explain, Analyse, and Discuss.
  • Use the linked flashcards and practice questions to check recall, then practise applying the idea in an exam-style answer.

Key concepts

ExplainAnalyseDiscuss

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This objective helps connect Firms outcomes to exam-style questions, flashcards, and revision notes for Firms.

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Paper 2 structured question: Firms

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Description

Impact of Scale on Production Costs

As the firm increased its production, it noticed a decrease in average costs due to bulk purchasing and improved labor specialization. However, after reaching a certain production level, the firm began to experience delays in communication and management issues.

  1. a

    State one internal economy of scale that the firm experienced.

    Aim for approximately 1 distinct marking point.

    [1]
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