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We have already looked at the concepts of economies and diseconomies of scale. Here is a summary of the main economies and diseconomies of Scale:
How do these concepts link with the advantages and disadvantages of large and small firms (it is obvious- don't over think this one!)
But how do we measure the size of a firm- when is a firm big or small?
Sales revenues
Profits (?)
Number of workers
Number of factories or shops/Assets
Value of the business (market capitalisation)
Why do firms grow large?
Despite all the advantages of being big there are far more small firms than large firms. Some industries like hair salons are dominated by small firms. Why do you think that is? Find other real life examples of industries dominated by small firms.
Now find some industries that are dominated by large firms.
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