Author Question: How might Gap take advantage of economies of scale by combining concept stores into one store? ... (Read 35 times)

itsmyluck · **on:** Jun 29, 2018

How might Gap take advantage of economies of scale by combining concept stores into one store?

What will be an ideal response?

Question 2

Because of the ________ of vaccinations, economic efficiency would be improved if more people were vaccinated.

A) positive externality B) moral hazard
C) adverse selection D) negative externality

robbielu01 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

At 12,500 square feet Gap's stores were too large and Gap was incurring diseconomies of scale. When Gap combines its separate Gap concept stores into a smaller space, Gap will use fewer resources, particularly less capital and less labor. Gap's costs will be less as a result. Additionally Gap's sales will be less but the proportionate decrease in cost will exceed the decrease in Gap's production. In this case Gap's average costs will decrease so that Gap can reap economies of scale it currently is not enjoying.

Answer to Question 2

A