As a retail logistics firm expands its scale of operations, its long-run average costs decrease because it is able to bargain for lower unit prices on packaging supplies and obtain commercial loans at reduced interest rates due to its size.
Therefore, the firm experiences
technical and financial economies of scale.
purchasing and financial economies of scale.
managerial and purchasing economies of scale.
technical and managerial 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.