a) Economies and diseconomies of scale

• define economies of scale

• state how economies of scale affect ATC

• explain how economies of scale affect ATC

• cost advantages earned when a firm grows larger

-

• ATC decreases

-

• scale of production increases

• increase in input < increase in output

• cost of input < revenue from output

• ATC decreases

• define diseconomies of scale

• state how diseconomies of scale affect ATC

• explain how diseconomies of scale affect ATC

• cost advantages earned when a firm grows larger

-

• ATC increases

-

• scale of production increases

• increase in input > increase in output

• cost of input > revenue from output

• ATC increases

• define increasing returns to scale

• define constant returns to scale

• define decreasing returns to scale

• increase in input < increase in output

• increase in input = increase in output

• increase in input > increase in output

• n/a

• n/a