Costs of Production
45 questions· page 1 of 5
The growth of a firm using a takeover is desirable because it enables consumers to benefit from lower prices and the firm to gain additional profits.
Evaluate this statement.
The growth of a firm using a takeover is desirable because it enables consumers to benefit from lower prices and the firm to gain additional profits.
Evaluate this statement.
Evaluate, with the help of a diagram(s) how total market demand and minimum efficient scale may determine the form of market structure in an industry.
‘Governments should use whatever methods they can to regulate monopolies because they are inefficient.’
Consider whether monopolies are always inefficient and what methods might be used by governments to regulate them.
In recent years the prices of many electronic products have fallen as sales have increased. Research to improve the products is expensive but there are large economies of scale in production.
Discuss what is likely to happen to the costs, prices of products and market structure in industries where there are large economies of scale.
Why is it important for a firm seeking to maximise profits to distinguish between the concepts of diminishing returns and economies of scale?
Analyse and discuss how the market price and quantity supplied might change if a profit maximising firm in a perfectly competitive market were able to achieve a monopoly status in that market.
Explain the meaning of, and the relationship between, diminishing returns, total product and marginal cost. Use a diagram to illustrate your answer.
‘Firms undertake vertical and horizontal integration to grow in size. They achieve beneficial economies of scale through growth.’
Consider whether economies of scale are always caused by integration and whether, therefore, there is no place for small firms in a modern economy.
Discuss the significance of economies of scale for the survival of firms.
Limit pricing may sometimes be used by a monopoly. It creates a barrier to entry which benefits consumers in the short run but increases costs to the consumer in the long run.
Discuss this statement.
Discuss the relative importance of marginal cost and average variable cost in determining short-run production decisions.