The number of software development firms in a specialized technology hub increases. As a result, the local pool of highly skilled programmers and software testers expands, lowering recruitment and training costs. Individual firms experience a reduction in their average costs.
The fall in average costs results from
a reduction in managerial diseconomies of scale.
an increase in internal marketing economies of scale.
the existence of external economies of scale.
the presence of internal technical economies of scale.
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.