ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 7, Problem 4.11P
To determine
Sources of economies of scale and diseconomies of scale.
Concept Introduction:
A competitive advantage that large entities have over smaller entities is called economies of scale. On the other hand the cost disadvantages that firms and government accrued due to increase in output and size hence increasing the unit cost per unit is called as diseconomies of scale.
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A rise in consumption in the economy would cause an increase in aggregate demand. Therefore, when consumers spend money on everyday goods and services, it not only helps to stimulate economic growth, but it could also present potential issues like unsustainable debt levels or inflation. I believe that it would be beneficial to consider such factors and adopt a purchasing strategy to help navigate the challenges posed by inflation or unsustainable debt levels.
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