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Edexcel IGCSE Business Studies 5.1 Economies and Diseconomies of Scale Questions

Practise defining scale effects and explaining how business growth can lower or raise average costs as operations expand.

Syllabus
First assessment 2019
Course
Business Studies 4BS1

Exam points

  • define economies or diseconomies of scale using average cost and output changes
  • explain why business growth may raise average costs through size-related problems

Covered syllabus points

5.1.1 Economies of scale5.1.2 Diseconomies of scale

Question 1

[Maximum number: 1]

Define the term economies of scale.

Question 2

[Maximum number: 1]

Artify Studio was set up in 2015 by Tay Hui Jae in the busy Kampong Glam area of Singapore. Artify Studio's aim is to have 'a communal art space where people can come together and paint, where people would be given as much creative freedom as they would have if they were in their own spaces.'

Artify Studio provides many services including its popular Liberty Art Jam where customers can paint as well as listen to music. The studio offers a Corporate Art Jam and Regular Kids Classes. Customers can purchase art materials after attending the studio.

Artify Studio is a profit-making organisation with a social element. It employs seven part-time people, all of whom are art enthusiasts.

Define the term diseconomies of scale.

Question 3

[Maximum number: 1]

NEXT works hard to remain competitive with other retailers of similar products.

Define the term economies of scale.

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