When firms become larger and larger, they are impacted by both economies of scale and diseconomies of scale at the same time. After a point, diseconomies of scale will outweigh economies of scale. This is when long run average cost increases due to a firm having an increase in output. As a firm like Starbucks is very large, staff may have less motivation to perfect their skills and perfect their customer service compared to a member of staff at a local cafe, therefore they may be less productive and produce/ work towards less output. Therefore, average cost of hiring staff is higher for a bigger firm. Also, if something is wrong in a large firm, such as a random light bulb, or an unproductive member of staff, it will take far longer to identify and solve the problem compared to this same issue in a small firm. These are known as communication and co-ordination diseconomies of scale.
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A-Level Economics | Demand and Supply
What is demand?
* demand is the number of goods and services that people are willing and able to buy at each price
What is the relationship between price and demand?
* downward sloping (inverse
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A-Level Economics | Quantitative Easing
* quantitative easing is when
* the central bank creates money electronically
* the central bank uses this to buy back government bonds from commercial banks
* banks willing and able to lend more money
* money supply
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Tradeable Pollution Permits | A-Level Economics Model Paragraph (AQA, Edexcel, OCR)
In order to reduce negative externalities in production, such as when the production of goods and services cause pollution (CO2 emissions), the government can begin by researching the size of the market failure,