[Question 1]

The following is a list of various types of economy of scale:

(i) The firm can benefit from the specialization and division of labour.

(ii) It can overcome the problem of indivisibilities.

(iii) It can obtain inputs at a lower price.

(iv) Large containers/machines have a greater capacity relative to their surface area.

(v) The firm may be able to obtain finance at lower cost.

(vi) It becomes economical to sell by-products.

(vii) Production can take place in integrated plants.

(viii) Risks can be spread with a larger number of products or plants.

Match each of the following examples for a particular firm to one of these types of economy of scale. (An example is done for you).

(a) Delivery vans can carry full loads to single destinations_________________

(b)It can more easily make a public issue of shares.______________________

(c) It can diversify into other markets.____________________

(d) Workers spend less time having to train for a wide variety of different tasks, and less time moving from task to task. ____________________

(e) It negotiates bulk discount with a supplier of raw materials._______________

(f ) It uses large warehouses to store its raw materials and finished goods._______________

(g) A clothing manufacturer does a deal to supply a soft toy manufacturer with offcuts for stuffing toys._____________________

(h) Conveyor belts transfer the product through several stages of the manufacturing process.

___________________