if you were the manager of a large firm that is unable to achieve economies of...
if you were the manager of a large firm that is unable to achieve economies of scale, would you recommend that the firm should cease operations and close? Why or why not?
Homework Answers
No.
It is not wise to cease operations if the firm is unable to achieve economies of scale.
This is because economies of scale refers to the cost advantages which accrue when the firm increases its scale of business operations. In the absence of economies of scale, it is not necessary that the firm is incurring losses. It might be experiencing falling profits but it should continue its operations as long as it is able to cover its variable costs.
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