Describe an activity or process or product of your chosen company that exhibits economies or diseconomies of scale. Describe the source of the scale economy. How could the organization exploit the scale economy or diseconomy?
A good example for this discussion identifies the output (what is being produced), the inputs, and how average cost (AC; cost per unit) increased or decreased as that output and input changed over time (‘the long-run’). If AC rises when output and inputs increase from one period to the next (the long-run) then the production exhibits diseconomies of scale. When AC falls it exhibits economies of scale.
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