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Subjects · Leaving Cert Economics

Leaving Cert Economics: Economies & diseconomies of scale

How often Economies & diseconomies of scale comes up on the Economics papers, every year it was asked, and questions to try.

HL Asked on 2 of the last 5 Higher Level papers, most recently in 2025.

OL Asked on 1 of the last 5 Ordinary Level papers, most recently in 2023.

Economies & diseconomies of scale, Higher Level(7 marks)

Quick ones on Economies & diseconomies of scale.

(a)Which is an internal economy of scale?
  1. A new motorway serving the whole industry
  2. Bulk-buying discounts on raw materials
  3. Rising wages due to labour shortages
(b)The long-run average cost curve slopes upward when a firm experiences…
  1. Diminishing marginal utility
  2. Economies of scale
  3. Diseconomies of scale
(c)As a firm grows, managers struggle to communicate and decisions slow. This is…
  1. A managerial diseconomy of scale
  2. The law of diminishing returns
  3. A technical economy of scale
Show the answers

(a) Bulk-buying discounts on raw materials

(b) Diseconomies of scale

(c) A managerial diseconomy of scale

Your turn: Higher Level questions on Economies & diseconomies of scale.

Higher Level

Asked on 2 of the last 5 Higher Level papers, most recently in 2025.

Every paper, year by year

YearWhere it came up
2025Q16
2024Not asked
2023Not asked
2022Not asked
2021Q11

Links open the State Examinations Commission’s paper for that year.

More Economies & diseconomies of scale questions

Economies & diseconomies of scale, 3 marks

Why do many small firms survive despite economies of scale?

  1. Small firms always have the lowest costs
  2. Large firms cannot legally enter such markets
  3. Their markets are small or need a personal service
Show the answer

Their markets are small or need a personal service

Where demand is local or customers want a personal, tailored service (e.g. hairdressing), there is no room for large-scale output, so small firms stay competitive.

Ordinary Level

Asked on 1 of the last 5 Ordinary Level papers, most recently in 2023.

Every paper, year by year

YearWhere it came up
2025Not asked
2024Not asked
2023Q16
2022Not asked
2021Not asked

Links open the State Examinations Commission’s paper for that year.

More Economies & diseconomies of scale questions

Economies & diseconomies of scale, 2 marks

Economies of scale mean that as a firm grows larger?

  1. Its total costs fall
  2. Its average cost per unit rises
  3. Its average cost per unit falls
Show the answer

Its average cost per unit falls

A large firm can buy in bulk, use specialised machines and borrow more cheaply. So its cost per unit falls as the scale of production rises in the long run.

Economies & diseconomies of scale, 3 marks

A large supermarket chain gets discounts for buying in bulk. This is?

  1. An external cost to suppliers
  2. A purchasing economy of scale
  3. A diseconomy of scale for the chain
Show the answer

A purchasing economy of scale

Big orders give a firm bargaining power with suppliers, so it pays less per unit. This lowers its average cost: a purchasing (commercial) economy of scale.

Economies & diseconomies of scale, 3 marks

Which is a diseconomy of scale?

  1. Poor communication in a very large firm
  2. Cheaper loans from banks for large firms
  3. Bulk-buying discounts from suppliers
Show the answer

Poor communication in a very large firm

When a firm grows too big, management gets harder, messages get lost and workers feel less involved. Average cost starts to rise: a diseconomy of scale.

Other Economics topics

All of Leaving Cert Economics