Economies of scale are gained simply by producing more products – through more volume. The basic difference between the short run and the long run is that: C. at least one resource is fixed in the short run, while all resources are variable in the long run. Economies of scale and diminishing marginal returns can and do apply to the same firm. Internal growth therefore means that the business has continued to expand its operations through the sale of existing products or services. Which of the following is most likely to be an implicit cost for Company X? Because they frequently involve marketing and distribution efficiencies, economies of scope are more dependent … Economies of large scale production have been classified by Marshall into Internal Economies and External Economies. Economies of scale is a concept that is widely used in the study of economics and explains the reductions in cost that a firm experiences as the scale of operations increase. D. Marginal cost is the price or cost of an extra variable input (for example, an additional worker or machine) divided by its marginal product. Economies of scale occur within an firm (internal) or within an industry (external). D. firms like iTunes that distribute their products over the Internet. It is a long term concept. Economies of scale describes a cost advantage achieved by a company when production becomes efficient. A company would have achieved economies of scale when the cost per unit reduces as a result of an expansion in the firm’s operations. The law of diminishing returns indicates that: A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point. Which of the following statements is correct? In everyday language: a larger factory can produce at a lower average cost than a smaller factory. Similar to economies of scale, economies of scope provide companies with a means to generate operational efficiencies. Which of the following definitions is correct? Students like you are making the most of their study sessions with our most popular study sets. Exercise. Growth. C. Average fixed costs and average total costs would rise. This can make it hard to decide which will have more effect. Depending on the type of economies, these factors can be internal to an organization or present in its external environment. C. Economic profit = accounting profit - implicit costs. This occurs as the expanded scale of production increases the efficiency of the production process.Image: CFI’s Financial Analysis Courses. If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then: B. it is encountering economies of scale. It means the economies benefit the firm when it grows in size. within a firm. If a firm doubles its use of inputs and finds that output increases by 50%, then it has experienced . 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