Describe and provide local examples of economies and diseconomies of scale while explaining possible reasons for...

Describe and provide local examples of economies and diseconomies of scale while explaining possible reasons for both situations to occur.

Expert Solution

Economics of scale: When the total output of the firm increase than the cost per unit of production of that will be reduced.

Ex:When the business is expanding the fixed costs will become nil as they will try to own the equipment rather than renting it which reduces the cost of production per unit. Hence here total output is increasing but the cost of production per unit is reduced.

MC Donald's

Diseconomics of scale: When the total output of firm increases than the cost per unit of the production will also increase.

Ex: Large companies when raise to a point where economics of sale will not work as when the labour increases which will lead to increase in cost of production.

When the company is expanding than economics of scale will be there as during that expansionary stage the firm will increase the output but reduce the cost production per unit.

When the company reaches the stage where economics of scale will no longer can effect than the company will have Diseconomics of scale due to communicate gap between employees and employers, due to increase in labour etc.

Rahul Sunny answered 1 year ago

define and explain the reasons for the economies and diseconomies of scale in detail with real...

define and explain the reasons for the economies and diseconomies of scale in detail with real world examples

Describe and define the economies and diseconomies of scale for both companies in relation to the...

Describe and define the economies and diseconomies of scale for both companies in relation to the resources they use in their factors of production (Land, Labor, Entrepreneurial Talent, & Capital). What types of Externalities to both firms face? How are they alike? How are they different? 3. Provide two examples of price discrimination that the firms above engage in and how that specific action would help the firms sales.

Define economies and diseconomies of scale and provide one example of each either in the education...

Define economies and diseconomies of scale and provide one example of each either in the education industry/auto industry

1. What are economies of scale? How do economies and diseconomies of scale influence the shape...

1. What are economies of scale? How do economies and diseconomies of scale influence the shape of the long run cost curves? How do economies of scale relate to indivisible setup costs? What are diseconomies of scale and how do they arise?

The existence of both economies of scale and diseconomies of scale would have what effect on...

The existence of both economies of scale and diseconomies of scale would have what effect on the LRAC curve? It would make it upward-sloping. It would make it downward-sloping. It would give it an inverse U shape. It would give it a U shape. It would make it horizontal.

Given the following information, does this firm has economies of scale or diseconomies of scale. Explain...

Given the following information, does this firm has economies of scale or diseconomies of scale. Explain why with reference to the values of ATC. Small production unit . Large production uni Q . FC VC Q . FC . VC . 5 50 . 50 50 . 500 . 500 10 . 50 . 70 100 500 . 800 20 . 50 . 200 200 . 500 . 2500

Explain the differences between Economies of Scale and Diseconomies of Scale and explain what factors influence...

Explain the differences between Economies of Scale and Diseconomies of Scale and explain what factors influence over them. In order to do so, you will have to use the concepts of Short and Long Run average total costs. Remember that in the Short Run Average Total Cost curve, you can find at least one of your assets as fixed and in the Long Run Average Total Cost curve, all the assets are considered variable, meaning that you are assuming the...

DISTINGUISH BETWEEN ECONOMIES OF SCALE AND DISECONOMIES OF SCALE TRUE OR FALSE. A PRODUCER CAN OPERATE...

DISTINGUISH BETWEEN ECONOMIES OF SCALE AND DISECONOMIES OF SCALE TRUE OR FALSE. A PRODUCER CAN OPERATE IN THE SITUATION IN WHICH PRICE IS LESS THAN AVERAGE VARIABLE COST. WHAT FOUR BASIC CONDITIONS CHARACTERIZE A COMPETITIVE MARKET? WHAT IS ECONOMIC PROFIT? CAN A FIRM IN A COMPETITIVE INDUSTRY EARN ECONOMIC PROFIT?

Please describe and give examples for each of the following micro-economic terms: Economies of scale (economies...

Please describe and give examples for each of the following micro-economic terms: Economies of scale (economies of mass production) Economies of scope Minimum efficient scale Long run average cost Constant returns to scale Increasing returns to scale Decreasing returns to scale Average variable cost Total fixed cost Total variable cost Marginal cost Average Cost

A possible reason for monopoly is economies of scale. Consider the market for books and the...

A possible reason for monopoly is economies of scale. Consider the market for books and the production of a book. Explain what is meant by economies of scale and the cost structure in a case like this. Explain why/how the production of a book can have economies of scale. Assume that the production of the book «Monster» has the following cost function: C(X) = 200 + 5X. Calculate an expression for the average cost, and draw this in a figure...

Question