Distinguish Economies and Diseconomies of Scale

question 70

Essay

Distinguish economies and diseconomies of scale. How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?

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Definitions:

Board Of Directors

A group of individuals elected to represent shareholders and oversee the major decisions and policies of a company.

Common Stock

Equity ownership in a corporation, with voting rights and the potential for dividends, representing a claim on a portion of the company's profits.

Supernormal Growth

A temporary period during which a company experiences significantly higher than average growth rates.