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Costs, Profit, Barriers to Entry, Objectives of firms, Efficiency, <---…

- - - - Internal
        
        Risk Bearing
        
        Risk can be spread over larger output range
        
        Financial
        
        Reputable firms get lower rates.... costs can be spread over a larger range of output
        
        Manegerial
        
        Better managers increase productivity
        
        Technical
        
        Specialist Machinery increases productivity
        
        Marketing
        
        Bulk adds... wider range of media... increases productivity
        
        Purchasing
        
        Bulk buying
        
        Really Fun Milfs Try Making Porn
      - External
        
        Better transport infastructure
        
        Cheaper to sell goods and access raw materials and goods... decrease in total and average costs
        
        Component suppliers move closer
        
        Once you are a big purchaser component suppliers want to move closer to you... makes it cheaper to buy key components and there is a decrease in total and average costs
        
        R+D firms move closer
      - Dis
        
        Control
        
        Hard to control a large company... as so many more employees slack off
        
        Communication
        
        Harder to spread information... many employees makes communication weaker
        
        Coordination
        
        large companies are like patting your head and rubbing your stomach
        
        Motivation
        
        Same as control
- - - - knowledge of MR and MC may be imperfect which makes it hard to profit maximise
      - Could lead to regulatory authorities intervening as it is a signal of consumer exploitation... leads to regulation which isn't great
      - profit maximisation is not always the best business strategy
  - - - Predatory pricing... which drives out profit maximising competition
      - Greater economies of scale... as reducing average costs to reduce prices allows for them to gain market share ahead of rivals who don't get the greater economies of scale
      - The divorce between ownership and control... may make revenue max an objective pursued by managers looking to max their benefits at work.... Managers can justify higher salaries and perks as the revenue figures are a headline grabber and a justification.
  - - - Flood the market with products or stores... helps to develop the brand and gain consumer loyalty, especially useful in high competitive markets... in long term monopoly power can be potentially gained
      - Greater economies of scale... as producing the highest possible quantity without loss making leads to EofS, reducing AC to reduce prices and gain market share ahead of rivals
      - Divorce between ownership and control
- - - - AC = MC
      - All possible economies of scale are being exploited
    - - Producer and consumer surplus is maximised
      - AR = MC
    - - producing on the AC curve at any point