Exercise 2

Read the slides and background literature on the topic of different types of economies of scale. Then

please think of the organization you work for or one that you know well (like a previous job or the job of

your partner, or some other organization you know a lot about).

(15 points) Describe at least 3 diseconomies of scale in that organization.

(5 points) Then make a judgment on whether you think the organization as a whole enjoys economies of

scale overall at the margin': would the organization produce more than 10% extra if its size (in terms of

people working for it, machines, offices, etc.) was 10% bigger? Argue why you think that is the case.