Cambridge International as and a level Economics Ebook

minimum effi
cient scale
since it is the lowest level of output where average costs are 
minimised. In industries where the minimum effi
cient scale 
is low there will be a large number of fi rms. Where it is high, 
competition will tend to be between a few large players.
Minimum eff icient scale: 
lowest level of output at which 
costs are minimised.
KEY TERM
SELF-ASSESSMENT TASK 
7.5
Transport firms gain economies of scale
Despite recession and uncertainty in the global 
economy and overcapacity in the industry, the world’s 
largest sea container shipping companies are ordering 
new vessels in order to benefit from economies of 
scale. Maersk Line, the largest, took delivery in 2012 
of five huge new Type-E vessels, each capable of 
carrying 18,270 TEUs (twenty-foot equivalent units). 
Another 16 vessels of the same size are currently under 
construction in South Korean shipyards and will be 
delivered to Maersk by the end of 2014.
In order to accommodate this increased capacity, Maersk, 
like its main rivals, is scrapping smaller vessels as these 
are more expensive to operate and maintain. The Asia-EU 
and Asia-USA markets are highly price competitive so 
these newer vessels will help the company to consolidate 
its position as the world’s number one.
A second example is in air transport. The Airbus A380 
is a double deck, wide body jet manufactured by the 
Anglo-French Airbus Corporation. It is the world’s 
largest passenger aircraft with a maximum capacity 
of 853 passengers in a single class configuration or 
525 passengers in the more conventional three class 
configuration. The aircraft ’s four engines are quieter 
and more fuel eff icient compared to the aircraft it is 
replacing, notably the ageing Boeing 747s. There is a 
clear opportunity to benefit from economies of scale,