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3 questions on Economies and Diseconomies of Scale (AQA specification 1.4.5) from the A-Level Economics papers, 2021–2025. Every question links to the official mark scheme at the page its answer begins on.
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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.
1.4.5 Economies and Diseconomies of Scale · 1.5.6 Monopoly and 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.
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