Economies & diseconomies of scale

Extract E (line 10) states: ‘The minimum efficient scale in the water industry is large’. With the help of a diagram, explain why the large minimum efficient scale in the water industry is likely to lead to the market being supplied by a few large firms with monopoly power.

Explain, using examples, how the existence of economies and diseconomies of scale affect firms’ average costs of production.

Explain how a firm may benefit from both internal and external economies of scale.

With the help of a diagram, explain why breaking up a natural monopoly in rail may affect long-run average costs.

A firm benefits from significant and persistent economies of scale as it increases output. Which one of the following is the most likely consequence as it grows in size?

The firm’s