Apply the “scale” concepts of the long-run average cost curve to the following real world examples by explaining whether they represent economies to scale, constant returns to scale, or diseconomies to scale, and why: 1. E-bay 2. Public School districts 3. Failed mergers of major companies such as AOL/Time Warner
Answer: E-bay: E-bay is an awesome example of taking advantage of economies to scale. The basic concept of economies to scale is being able to spread fixed costs across enough consumers that the cost “per consumer” is as low as possible.