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SingaporeEconomicsQuick questions
Firms, Production and Costs
Quick questions on Economies and diseconomies of scale explained: O-Level Economics
1short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What are average cost as a firm grows?Show answer
Putting these together, a firm's average cost usually falls as it grows (economies of scale dominate), reaches a lowest point at the most efficient size, and then rises if the firm keeps growing (diseconomies of scale take over). This is why each industry tends to have a typical efficient size of firm.
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