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    PracticeAQA GCSEAQA GCSE Economics Paper 1Question 03
    Easy1 markMultiple Choice
    How markets workGeneralProductionEconomies of Scale

    AQA GCSE · Question 03 · How markets work

    A firm can reduce its average costs in the long run by making effective use of a large machine. This is an example of

    Answer options:

    A.

    financial economies of scale.

    B.

    purchasing economies of scale.

    C.

    risk-bearing economies of scale.

    D.

    technical economies of scale.

    How to approach this question

    Consider the different types of economies of scale. The question specifically mentions a 'large machine', which is a piece of capital equipment used in the production process. Match this to the correct category.

    Full Answer

    D.technical economies of scale.✓ Correct
    Economies of scale are the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale. Technical economies of scale are achieved through the use of large-scale capital machinery or production processes. A large machine can produce more output for a given amount of input, thus lowering the average cost of production.

    Common mistakes

    Mixing up the different types of economies of scale. For example, confusing technical economies with purchasing (bulk buying) or financial (cheaper loans) economies.
    Question 02All questionsQuestion 04

    Practice the full AQA GCSE Economics Paper 1

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    More questions from this exam

    Q01Which of the following best describes the equilibrium price in a market?EasyQ02Which of the following could lead to a reduction in the quantity supplied of a product?MediumQ04Which of the following would be included in the tertiary sector of an economy?EasyQ05Which of the following is an example of a variable cost?EasyQ06In which jobs are earnings likely to be highest?Easy
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