What is meant by economies of scale and what is the importance of this concept to economic growth?
Please provide the best answer for the statement.
Economies of scale are production advantages which are derived from market and firm size. The importance of this concept is that large manufacturers are able to use assembly-line production techniques, to use large-scale efficient equipment, and to take advantage of specialization that cannot be done in small-scale production. This efficiency in production and distribution contributes to growth.
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Goods like exclusive designer clothes carry with them prestige value linked to their price. As a result, some people demand more of such goods as the price increases. For those people, such goods are Giffen goods.
Answer the following statement true (T) or false (F)
A landlord rents his rat-infested apartment for $700 per month for a total of twelve months this year. What happens to GDP?
A) It increases by $8,400. B) It increases by the difference between the rent charged and the price of any maintenance and repairs. C) It decreases by $8,400. D) Nothing.
________ keeps the exchange rate fixed in the short run but then adjusts its value at regular intervals to account for supply and demand pressures
A) The European Monetary System B) A managed floating C) A crawling peg D) A crawling float