Economies of scale as forces that reduce a firm’s average costs
Our textbook defines economies of scale as forces that reduce a firm’s average costs as the scale of operation expands. As long as the ‘going is good’, large scale operations may be profitable as per-unit costs reduce, giving the entrepreneur better competitive advantage in the marketplace. But what happens in a pandemic? Is being the largest company in a market a good thing?
In your discussion, tell us
From an economics perspective, is it ever possible for a firm to grow to be too large for its own good (pandemic or not)? Completely explain your answer.
Give an example of a company that did, or came close to, becoming too big, in your opinion. Why?
What are the ramifications for a company becoming too big?
Who does it wrong?