Tuesday, July 10, 2007

Unit 1: Economies of scale Baby food

This BBC article talks about a proposed merger. The result would be a decrease in the average cost of output for the combined group; ie they will experience economies of scale


a) Give examples of the economies of scale that may arise

b) Can you think of any diseconomies that may arise?

c) Draw a diagram to shot the LRATC of production before and after the merger

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