-The firm is constrained by a fixed maximum capacity, which means that it can only increases the variable factors of production to increase its production while one of its factors of production is held fixed

-All the factors of production used by the firms can be changed to increase production

-These are factors of production which can be valued during short-run to increase production

-Cost that incurred due to the use of variable factors and the cost will vary with the level of output. Example: Wages

-Cost of production that is incurred due to the use of fixed factors and they do not vary with the level of output of the firm.

Example: interest payment of borrowing to finance business operation

-It is the total variable cost per output.

-It is the amount of fixed cost per unit of output

- It is the total cost divided by the quantity of goods produced

- Total cost is the sum of the fixed cost and variable cost

-MP is the additional change in output as a result of additional increase in the variable factor of production

- Marginal revenue is the additional revenue that will be generated by increasing the output of goods by one unit

-AP is derived from the total number of products produced divided by the total number of variable factor of production

-Cost savings accrued to a firm in the production of output as a result of a large scale production due to the expansion of the firm or the industry. For the advantages gained by the firm, it is known as internal EOS while for the advantages gained by the industry, it is known as external EOS

-Technical EOS

-Managerial EOS

-Financial EOS

-Commercial EOS

-Risk-bearing EOS

-Economies of concentration

-Economies of disintegration

-Economies of information

-Administrative DEOS

-Managerial DEOS

-Hierarchy Alienation

-Concentration of resources and facilities

-Concentration of information

-Integration of production

-Economies of scale are closely linked to increasing returns to scale. Reaping economies of scale will mean that the firm is producing at a lower cost per unit output in the long run. Hence, this will help the firm to maximize total revenue and profits.

-The long run average cost curve is usually U-shaped. This means that when output rises above the minimum efficient scale, diseconomies of scale sets in. Hence firms should not increase scale of production above the MES level.

-Output increases more than proportionately to the increase in all its inputs.

-Output increases proportionately to the increase in all its inputs.

-Output increases less than proportionately to the increase in all its inputs.

-Red tape is excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic, and hinders or prevents action or decision-making.

-Low labour morale refers to little incentive or motivation among workers to work hard or contribute to the firm.

-Division of Labour is the specialisation of individuals who perform specific tasks and roles. Division of labour usually leads to increase in productivity and efficiency.

-Able to reap internal economies of scale

-Gain greater share of market power

-Achieve greater security by extending the range of products and markets

-Greater market valuation

-Reduce take-over by other firms

-Complexity of management

-Less innovation

-It states that as more units of a variable factor are applied to a given quantity of a fixed factor, there comes a point beyond which the extra output from additional units of the variable factor will eventually diminish.

-Internal economies of scale are the cost savings that occur to a firm in the long run as a result of the firm’s expansion. The firm’s long run average cost will fall as the size of firm increases.

-External economies of scale are the cost savings that occur to all firms in the industry in the long run as a result of expansion in the industry or concentration of firms in a certain location. The firm’s long run average cost will fall as the industry expands.

-Acquisition refers to a company completely taking over another company and becomes the sole new owner of the company that has been acquired.

-When two firms merge, a completely new enterprise may be formed or the two firms become one with equal stakes at decision making.

- Consolidation of production process

- Higher efficiency of production

- Access of new technology

- Exchange of ideas between companies

- Greater capital for product innovation

- Attain cost savings due to economies of scale

- Large market share to influence market price

- Market dominance may give rise to consumer exploitation

Through strategies like:

-banding

-targeting niche markets

-providing customized/personalized services

-It is a subset of the market on which a firm carves out for itself.

-It occurs when firm takes over a similar firm at the same stage of production in the same industry.

-It occurs when a merger takes place between firms engaged in different stages of a productive process.

-R&D increases the cost of production greatly as it is capital-intensive.

-Rise in productivity decreases the cost of production.

-Convenience for consumers as small firms are usually located near its market

-Provide specialized products for consumers (niche markets)

-Provide personalized/customized services for consumers which lead to consumer satisfaction

-Higher price of obtaining goods as small firms are unable to reap economies of scale, hence cannot lower prices for consumers

-Less variety of goods as small firms do not have the capacity to diversify

-Little or no improvement in product quality due to the lack of capital to engage in R&D

-Able to reap internal economies of scale

-Gain greater market share

-Increase consumer base

-Able to invest in R&D

-Higher prices for consumers as merger means greater market power and ability to set price.

-Little or no improvement in product quality due to the greater market power (no need for constant innovation)

-Cost savings which are passed on to consumers as firm gains economies of scale and lower cost of production

-Improvement in quality of products as firm has greater ability to conduct R&D

-Increase in variety of products as firm has the capacity to diversify

-In the short run, the efficiency is based on the rate of utilization of fixed factors by the variable factors. There is better utilization of resources when the production is efficient, over-utilization when the production is less efficient and negative utilization when the production is efficient.

-In the long run, the source of efficiency is derived from the economies of scale which is the cost saving and gain in production attained as a result of large scale production. There are economies of scale to be gained when the firm is efficient and there are diseconomies of scale when the firm is inefficient as production increases.

-Specialization of production is a method where a business, area or economy focuses on the production of a limited scope of products or services to gain greater degrees of productive efficiency within an overall system.

-The production law measures the efficiency of production which shows how the scale of production will influence the rate of change in output in relation to change in input based on the influence from the economies and diseconomies of scale.

-The law of diminishing marginal returns is a law of economics that states an increasing number of new employees causes the marginal product of another employee to be smaller than the marginal product of the previous employee at some point.

-The law of variable proportion states that as the quantity of one factor is increased, keeping the other factors fixed, the marginal product of that factor will eventually decline.

-The resources used for production are known as factors of production which can be classified as land (rent), labour (wage), capital (interest) and entrepreneurship (profit).

-These are factors of production which cannot be varied during short run to increase production.

-These are factors of production which can be valued during short-run to increase production.

-Short Run: