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1.4 Production, costs and revenue

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Question 6

As a manufacturer of advanced offshore wind turbines expands its scale of production, it invests in custom-built, automated welding machinery that dramatically reduces the average cost per unit at high volumes of output. However, as the organisation grows, its multi-layered hierarchical structure causes vital instructions from senior executives to become distorted by the time they reach factory floor supervisors, resulting in frequent production bottlenecks.

Consequently, the firm is experiencing:

A

technical economies of scale and communication diseconomies of scale.

B

managerial economies of scale and coordination diseconomies of scale.

C

technical economies of scale and managerial economies of scale.

D

purchasing economies of scale and coordination diseconomies of scale.

Markscheme

1.4 Production, costs and revenue Questions

  1. A Level
  2. /Economics
  3. /1.4 Production, costs and revenue

156 exam-style questions on AQA A Level Economics 1.4 Production, costs and revenue, covering 1.4.1 Production and productivity, 1.4.2 Specialisation, division of labour and exchange, 1.4.3 The law of diminishing returns and returns to scale (A-level only), 1.4.4 Costs of production, 1.4.5 Economies and diseconomies of scale, 1.4.6 Marginal, average and total revenue, 1.4.7 Profit, and 1.4.8 Technological change (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.

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