2.1.1

Flashcards covering key vocabulary and concepts related to firm growth, costs, competitive advantage, and organizational culture.

Long Run Average Cost Curve

Average costs initially fall due to economies of scale, then rise after the optimum level of output due to diseconomies of scale.

Minimum Efficient Scale

The lowest point on the LRAC where optimum output is achieved and economies of scale are fully utilized.

Market Power

Large firms' dominance, allowing price-setting and deterring new entrants.

Monopsony Power

A firm's ability to buy stock at lower prices due to its large size.

Competitive Advantage

Products are superior to competitors due to price, quality, cost, or niche market.

Cost Competitive Advantage

Achieved when a firm lowers average costs to maximize consumer value.

Profit Motive

The incentive for firms to grow for higher earnings.

Diseconomies of Scale

Average costs increase per additional unit produced beyond a certain output level.

Skills Shortages

Demand for labor exceeds supply, potentially leading to higher wages.

Corporate Culture

Shared values, beliefs, and norms of employees within a firm.