Final Term Activity #1

(Please do not copy paste from the lecture or internet)

How economies and diseconomies of scale happen? Explain in your own words.
Economies scale is when the cost per unit reduced because the output rises. It
happens because costs are divided over a larger number of goods.
While, Diseconomies scale is when the cost per unit and the output both
increases. It happens when the company grows larger or expanding for example, the
company will build additional branches so, that the costs per unit increase.
Discuss and explain Short Run and Long Run Costs
In my own understanding, in short run we only focus or look at the variable and
revenue while fixed cost is not considered. In long run, we are considering the land,
capital, goods and these are part of fixed costs so fixed cost is considered in long run
and the variable cost.