Microeconomics · free preview
Economies of Scale and Efficient Size
The long-run curve's shape reflects returns to scale, falling costs from spreading, specializing and bargaining, rising costs from coordination, and its trough sets the efficient plant size an industry's structure inherits.
1. Two different fades
Two different fades
2. Where scale economies come from
Where scale economies come from
3. Minimum efficient scale
Minimum efficient scale
4. Scale in the data
Scale in the data
5. Returns to scale versus diminishing returns
A bakery doubles its bakers, ovens, floor space and delivery vans, and output rises from 400 to 900 loaves a day. Separately, at any given plant, adding one more baker always adds less output than the previous one. Which pair of labels fits?
6. What scale economies do not include
Which of the following is NOT a source of economies of scale?
7. The scale multiplier
A firm doubles all its inputs, and output rises from 1,000 units to 1,300 units. Compute output as a multiple of its original level and write the number with one decimal.
8. Doubling everything
A brewery doubles all inputs and its output rises from 400 to 900 barrels. What does this reveal?
9. Not a source of scale economies
Which of the following is NOT a source of economies of scale?
10. The doubling ratio
A firm doubles all its inputs and output rises from 600 to 1,440 units. Compute the ratio of new output to old output, and write the number.
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