Which type of economies of scale is most likely to benefit from a larger workforce?

Prepare for the Edexcel AS/A‑Level Business Theme 3 Exam. Engage with multiple choice questions and detailed explanations. Enhance your understanding and get exam ready with our comprehensive resources!

The correct choice indicates that internal economies of scale are the type most likely to benefit from a larger workforce. This concept refers to cost advantages that an organization can achieve as it increases its level of production.

When a company expands its workforce, it can increase its production capacity, allowing it to spread fixed costs over a larger number of goods or services. This is particularly pertinent in manufacturing environments where more workers can lead to specialization, improved efficiency, and greater output. As firms grow, they can invest in more advanced machinery or better technology, allowing employees to work more effectively. Such internal improvements lead to reduced per-unit costs.

In contrast, external economies of scale arise from external factors or industry-wide improvements and are not directly linked to the internal decisions of a firm regarding its workforce. Backward vertical integration relates to acquiring control over suppliers, which does not inherently involve workforce scaling. The minimum efficient scale refers to the level of production at which a firm can produce at the lowest average cost, but it does not specifically focus on workforce size. Thus, internal economies of scale clearly highlight the benefits gained from a larger workforce, making it the most suitable answer.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy