ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Bulk purchases of raw materials, parts and components at favourable prices
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The introduction and use of advanced technology
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Specialised back-up services available in a particular region
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Lower interest rates, thus reducing the cost of borrowing to large companies
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Detailed explanation-1: -External economies of scale can happen because of positive and negative externalities. Positive externalities include a trained or specialized workforce, relationships between suppliers, and/or more innovation. Negative ones happen at the industry levels and are often called external diseconomies.
Detailed explanation-2: -Technical progress leads to development of machine at low price is example of external economies of scale.
Detailed explanation-3: -There are two main types of economies of scale: internal and external. Internal economies are controllable by management because they are internal to the company. External economies depend upon external factors. These factors include the industry, geographic location, or government.
Detailed explanation-4: -External economies of scale occur when the cost per unit depends on the size of the industry but not necessarily on the size of any one firm. Internal economies of scale occur when the cost per unit depends on the size of an individual firm but not necessar-ily on that of the industry.