1. Economies of scale Large businesses are able to gain economies of scale. This allows a lower average cost per unit produced.

2. Economies of scale http://www.youtube.com/wat ch?v=duYQ7W-w258

3. Economies of scale Purchasing economies Marketing economies Financial economies Managerial economies Technical economies Kinaesthetic

4. Diseconomies of scale It is possible for a business to become so large that it becomes less efficient. Poor communication The larger the organisation the slower communication becomes. It often takes longer for decision made by managers to reach all groups of workers. Low Morale Large businesses employ thousands of workers, it is possible that workers may not see their superiors, therefore leading to low morale. Inefficient production Large scale production, might actually cost more than smaller scale production, extra staff may be needed, more machines etc

5. Questions 1.Give three examples of economies of scale that a supermarket might gain as it expands and opens new stores 2.Explain two possible diseconomies of scale for the supermarket as it expands