Define Economies of Scale and Give Two Reasons Why Firms

question 93

Essay

Define economies of scale and give two reasons why firms may experience economies of scale. Is economies of scale a long-run concept or a short-run concept?

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Par Value

The nominal or face value of a share of stock or a bond as stated by the issuer, which is often minimal and has little relation to its market price.

Business Combination

The process of merging two or more companies into a single entity, often to expand business operations or to enter new markets.

Consolidated Common Stock

The aggregation of common stock of a parent company and its subsidiaries, presented as total common stock in consolidated financial statements.