Nike Has Achieved Economies Of Scale
subsidies. With such a grand scale of suppliers, Nike has achieved economies of scale. Nike ensures
that their suppliers perform at the most competitive levels by implementing a performance
measurement system known as the Manufacturing Index (MI). (Appendix) This index monitors
quality, cost, delivery time and sustainability, and is frequently monitored each period. Suppliers
who fall below a certain threshold – which they call the bronze level – have their contracts nullified.
Quality: Nike's places strong emphasis on the quality of their products by reinforcing their tight
measurement on their supplier's performance. The company has long been known for their superior
quality, reliability, and excellent designs. Furthermore, they capitalized on their high quality by
investing heavily in marketing initiatives to increase brand loyalty and strengthen consumer
confidence, which ultimately increases the consumer utility of their products. Creating a team of
Nike Scientists devoted to continuously improving the quality of their products was only one part of
their strategy. They also invested heavily in a quality control system known as the InfinityQS, which
helps them identify areas of issue and monitor the overall quality of their products. (InfinityQS)
Innovation: In such a mature and competitive industry, continuous innovation is crucial to the
success of the company as it gives a unique selling point that rivals do not have. Both product and
process innovation are Nike's
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Definition Of Functional Level Strategies
Questions on Chapter 4
1. What is functional level strategies and how it contributes to efficiency?
Function strategy is that the approach a purposeful space takes to realize a company and business
unit objectives and techniques by maximizing resource and productivity.
It is necessary that a company sporadically (at least annually, sometimes as a part of the
Medium–term coming up with process) review all purposeful strategy to assure that they 're
 Consistent with the business strategy.
 Supportive of the business strategy.
 Consistent with different purposeful strategy.
Functional ways square measure developed by specialists in every space. purposeful ways work as a
backbone of the organization. It provides the fundamental info on ... Show more content on
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Once economists square measure talking concerning economies of scale, they 're typically talking
concerning internal economies scales. These square measure the benefits gained by a private firm by
increasing its size so having larger or additional plants.
Economies of scales square measure the worth beneficiaries with the aim of a production gain
feeling to growth. Once economists square measure conversations concerning economies of scale,
they 're typically discussion concerning internal economies scale. These squares measure the
advantages gained by a personal firm by increasing its size so as that having larger or extra plants.
Internal and external economies of scale:
Managerial economies:– As a firm grows, there 's larger potential for managers to specialize in
explicit tasks .specialist managers area unit seemingly to be additional economical as they possess a
high level of experience, expertise and qualifications compared to 1 person during a smaller firm
attempting to perform all of those roles.
Financial economies: – several little businesses realize it laborious to get finance and once to get
finance is commonly quite high. This can be as a result of little businesses that have developed an
honest data. Massive corporations thus realize it easier to seek out potential loaner and to boost cash
at lower interest rates.
Research and development economies:–A massive firm will have a quest and development
department, since running such a development

Questions: Bus Strategy And Mgmt Strategy
MGMT 510–91–2017/Late Fall – Bus Strategy & Mgmt Principles
Assignment 3
BINDHU REDY GURRAM
Chapter 5
1. Describe low–cost strategy. How does this relate to differentiation?
Ease technique is one of the business level methodology which can be utilized by the
organization/association to deliberately position itself in the market keeping in mind the end goal to
accomplish upper hand. Minimal effort on products can be effortlessly accomplished by having
economies of scale which likewise helps in beating the costs of the adversary organization.
Separation is alternate business level technique to accomplish upper hand by offering an item or
administration which are novel in the market and which can't be effortlessly imitated by the
adversary organization. Both of these methodologies have their own favorable circumstances and
inconveniences. Illustration Walmart is an ease ... Show more content on Helpwriting.net ...
This aides in accomplishing economies of scale.
The primary contrast is as far as accomplishing economies of scale. Divided enterprises confront
trouble in accomplishing economies of scale because of its low creation ability. Though for merged
businesses it is less demanding to accomplish economies of scale and henceforth have minimal
effort items.
2. What opportunities and advantages do consolidated industries offer that fragmented industries do
not?
Points of interest and openings offered by combined businesses are:
Low cost items as its simpler to accomplish economies of scale
Cost administration advantage as the business is interconnected through IT
Rapid extension and enhanced execution of the working framework through diversifying Building
on abilities and assets through mergers and acquisitions.
3. Describe horizontal and vertical integration. Why do businesses leverage these vehicles for
growth, and how can they aid in gaining competitive

Diminishing Returns in the Short Run vs. Economices of...
Diminishing Returns in the Short Run vs. Economices of Scale in the Long Run Production is the
transformation of inputs into outputs. For firms to remain in business, they should avoid running
into bankruptcy by efficient allocation of resources. The desired result is that as inputs are utilized,
outputs will magnify by a greater percentage or the average cost per output will diminish according
to "the law of diminishing returns" and "economies of scale" respectively. According to the
universal definition of "the law of diminishing returns", "when one of the factors of production is
held fixed in supply, successive additions of the other factors will lead to an increase in returns up to
a ... Show more content on Helpwriting.net ...
On the contrary, "economies of scale" determines the technical optimum bases on the lowest
average cost per output as demonstrated in the diagram below. Furthermore, "diminishing returns"
emerges because when more and more variable factors are added to a given quantity of fixed
factors, all the fixed factors are utilized so marginal product increases. However, when there is a
further increase in variable factors, there is relatively too much variable factors, many variable
factors will lay idle and many tasks that is better done with capital goods are now being done
manually so efficiency declines. On the other hand, economies of scale occurs when firms expand
their scale of production as they gain benefits in some aspects. Strategically, large firms can afford
to advertise or even provide additional services such as free delivery. With a large output, the
average cost of advertising and the provision of services per output reduce. Besides, when
purchasing raw materials in bulk, large firms are often given discounts. Financially, large firms are
well–established and reliable so finance is more accessible and interest rate is also relatively lower.
Economically, large firms is more capable in bearing risks by diversification, they can invest into
new markets and

Summary of Economics of Strategy Book Essay
Chapter 1, Basic Microeconomic principles
TC function: Represent the relationship between total cost and output, assuming that the firm
produces in the most efficient manner possible given its current technological capabilities.
Semifixed: fixed over certain ranges of output but variable over other ranges
AC(Q): average cost function; describes how the firms average cost function or per unit of output
costs vary with the amount of output it produces.  When average costs decreases as output
increases, there are economies of scale
Margincal cost: refers to the rate of change of total cost with respect to output the incremental cost
of producing exactly one more unit of output. Margincal cost often depeds on the total volume ...
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If you produce a lower quantity of output it could be that you should use another technology than
someone who produces a large amount of output Short–run economies of scale: reductions in
average costs due to increase in capacity utilization in that occur within a plant of a given size
Long–run economies of scale: reductions due to adaption of a technology that has high fixed costs
but lower variable costs Indivisibilities are more likely when production is capital intensive: Capital
intensive: when the costs of productive capital such as factories and assembly lines represent a
signifi–cant percentage of total costs.
2)Increased productivity of variable inputs (mainly having to do with specialization) Materials or
labor intensive: when most production expenses go to raw materials or labor (are variable, variable
costs) "the division of labor is limited by the extent of the market: division of labor: refers to the
specialization of productive

World-Scale Hydrogen Economy: Pros and Cons Essay
Proponents of a world–scale hydrogen economy argue that hydrogen can be an environmentally
cleaner source of energy to end–users, particularly in transportation applications, without the release
of pollutants like particulate matter and carbon dioxide. However hydrogen continues to have
technical obstacles associated with it, including storage issues, due to the fact that hydrogen has a
high energy density by weight, but has a low energy density by volume when not highly compressed
or liquefied. A lot has been written about hydrogen and human being's emergence into a "hydrogen
economy". There are many studies published and numerous advances in the related technologies. As
a matter of fact the November 13th edition of the journal, Science, ... Show more content on
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Hydrogen freely bonds with other elements and is therefore bound into molecules on earth. Plants
use Photosystem II to carry out a hydrolysis reaction in their chloroplasts; cleaving a water molecule
and biding the hydrogen into carbohydrates while letting the oxygen free. This is where the energy
in fossil fuels is originally derived. On earth hydrogen is mostly found in water. Hydrogen makes up
roughly 11% of the mass of water and water is roughly 0.09% of the total mass of the earth. [2]
How do you free the hydrogen? There are at least four ways do so. The most common is "steam
reforming", 95% of current hydrogen production comes from steam reforming fossil fuels.
Environmentalists argue that using carbon–rich fuel sources like fossil fuels would defeat the
purpose of switching to hydrogen in the first place; Using fossil fuels would just turn a non–point
source emission (from tailpipes), into a point source emission (from power plants). They argue the
solution to carbon pollution is to combine hydrogen production with renewable non–carbon
releasing forms of power, like wind energy and solar power. Hydrogen carries energy through its
attractiveness towards other elements. When hydrogen bonds with gaseous oxygen (O2) energy is
released. The products of this reaction are energy and water, (H2O). We can use this energy to
power electrical devices and

Advantages Of Economies Of Scale
Economies of Scale
As a company grows, not all costs increase with it, and some may even go down. Incumbent
companies who have economies of scale can hence have a significant cost advantage over new
entrants and smaller competitors.
Economies of scale can be demand–side or supply–side and may be found in the cost of:
Original research
Raw materials
Manufacturing and production
Marketing to larger audiences
Shipments and logistics
Service and support
Attracting talented personnel
Overcoming economies of scale requires innovation and bold moves, such as devising lower–cost
manufacturing methods or sourcing overseas.
In practice, economies of scale are often not as significant as they may appear, as the costs
associated with their ... Show more content on Helpwriting.net ...
When rapid growth is essential, this is a less valid approach and collaborative options such as
partnering or licensing may be preferable.
When there is rapid change in the industry, with such as the need to replace out of date machinery,
and incumbents are slow to made needed investments, then this can play to the advantage of new
entrants.
Cost Disadvantages
As well as capital costs there are all kinds of other types of cost that can give incumbents an
advantage and new entrants a headache. These are often independent of the size of the company and
can hence give smaller firms a big advantage over new–entrant large companies.
Such additional costs/advantages may include:
The learning/experience curve gained from trying different things in the marketplace.
The sheer extent of how much knowledge is required to operate in the market, and the accessibility
of this.
Proprietary technology that cannot be copied.
Preferential access to limited supplies of materials and parts.
Assets bought when they were much cheaper.
Advantageous locations, from shopping mall positions to being close to customers.
Government subsidies and other national

Big Firms And Small Firms
Progressively, to an increasing extent, professionals in the financial world are beginning to recruit
smaller firms as opposed to the conventional recruitment of large firm with monetary benefits, tax
deductions and other motivations (Gort et al, 1982). This approach has two features: Firstly,
developing and supporting entrepreneurs and small businesses, secondly, expanding/ improving
infrastructure and to recruit a highly experienced and educated workforce (Gruber, 1995). These
efforts depend on improving the quality of life in the community and generating an attractive
business climate. Studies from economic development strategies aimed at attracting large firms are
likely to be successful only at high cost (Grabowski, 1968). The idea is not primarily for new
businesses to create jobs on a small scale but to enhance maximum growth in such businesses
through creation of ideas that may enable them grow into larger firms thus, creating more jobs on a
larger scale and leading in the industrial world (Grabowski, 1968). This essay is going to compare
big firms and small firms in terms of their innovation; the comparison will be based on their
economies of scale, scope and spillovers, research and development. Whether or not large firms are
more innovative than the small firms is debatable. A firm's innovative efficiency is affected by its
size, large or small. Large firms are sometimes more efficient because they possess economies of
scale. Economies of scale is an increase

Evaluate the View That the Separation of Ownership from...
Evaluate the view that the separation of ownership from control in large firms inevitably causes
diseconomies of scale
In this essay I plan to show what consequences there are from a separation of ownership from
control and what effects could occur as a result. I will be arguing whether managers are worth the
cost of hiring, to the business as a whole, giving examples of problems that may arise in these types
of situations and what impact they can cause. The separation of ownership in large firms is when the
owners appoint paid managers to run their businesses, causing ownership to be divorced from
control. Diseconomies of scale are the forces that cause larger firms to produce goods and services
at increased per–unit costs.
The ... Show more content on Helpwriting.net ...
A managing team would be split up into three groups; top–level, middle and lower. There is
specialisation in this managing sector where each group can focus on their own targets so that the
large firm on the whole could potentially accomplish. The top level would be responsible for
strategic decisions and so they must look into future prospects and be aware of external factors like
markets. This can be advantageous, for the firm is looked upon wholly in comparison to the rest of
the world. The middle level would be in charge of making the tactical decisions where they are
responsible for carrying out choices made by the top level. This part of the sector would be the
active doers where they put the ideas into practice. Finally the lower level managing group are
responsible for the operational choices. They would concentrate on making sure that the other two
are carrying out their goals. They can be portrayed as the motivating unit, to make sure that there
isn't any lack of action. This organisation of the division of labour can be extremely beneficial in
achieving their goals. Management has a method where they would start by planning what they will
do, following with organising to make optimum use of the resources required. Then there would be
some motivation and leading where there would be some exhibition of skills. Lastly some
controlling to ensure the plan is being followed. The procedure of

Does Trade Liberalisation Promote Long Run Economic Growth?
3. Does trade liberalisation promote long–run economic growth? INTRODUCTION: While in
principle, trade liberalisation promotes long–run economic growth by the means of markets
expansion for goods, human and physical capital associated with technological and managerial
learning; however, it largely destabilizes Global South economies. On the one hand, proponents
indicate a cause–effect relationship between trade openness and economic growth, citing Hong
Kong, Singapore, South Korea and Taiwan. On the other hand, opponents challenge this stance by
saying that free trade has limited success, referring to Africa and the Middle East (International
Monetary Fund, 2001), (The World Bank, 2002, p. 8). Firstly, this essay discusses the ... Show more
content on Helpwriting.net ...
These countries have initiated various national restructurings, including "governance, the
investment climate, and social service provision" (Ibid., p. x) for economic growth to occur
effectively. I. Advantages of trade liberalisation Openness to the global market increases the size of
the market. Firms will no longer produce only for the domestic market but also for much larger
external markets. Hence an increase in production which will allow the realisation of economies of
scale (the unit cost decreases with the size of the production thanks to better use of the equipment)
and therefore the fall in prices (reference); it is therefore in the interest of countries that have a
limited domestic market (small population, low living standards) to become outward looking to
expand the market size of their products (reference). The entry of new economic or trading partners
on a market may stimulate competition for innovation progress, improvement of quality of goods
and services, decrease prices as well as reducing unemployment rate (reference). In view of this,
governments that is eager to achieve real economic progresses should introduce rules and
regulations to secure investments and trade. This entails, among other provisions, the creation of a
regulatory board with a mandate to ensure equity in accessing goods and services and protecting
property rights within stable political and social environment (OECD.org, 2016), (The World Bank,
2002, pp. 12 – 14). As for

What Are the Advantages and Disadvantages to a Firm of...
Q4) what are the advantages and disadvantages to a firm of operating on a large scale?
Economies of scale fall under microeconomics and are the cost advantages a business obtains due to
expansion. As scale is increased they cause a producers average cost per unit to fall.
Microeconomics (from Greek prefix micro– meaning "small" and "economics") is a branch of
economics in which you study the behaviour of how the individual firms make decisions to allocate
limited resources. Normally, it applies to markets where goods or services are being bought and
sold. Microeconomics examines looks at how these decisions affect the supply and demand for
goods and services, which determines prices, and how prices, in turn, determine the amount
supplied ... Show more content on Helpwriting.net ...
However larger firms have advantages in keeping prices higher because of their market power.
Research and development economies are made when developing new and better products.
A larger firm can be safer from the risk of failure as it has a more diversified product range.
Moreover larger firm may have greater resilience in the case of a downturn in its market because of
larger reserves and greater possibility to make cutbacks.
External economies of scale are economies made outside a firm as a result of location. They come
about when a local skilled labour force is available. Furthermore when specialist local back–up
firms can supply parts or services. They can also come about because of a particular area having a
good transport network; also if an area has an outstanding reputation for producing a certain type of
good e.g. Sheffield is associated with steel.
Indivisibility of Plant is when a machine can not be made to do more than the one particular job it is
there for and is not viable to produce other products.
Agricultural machinery appropriate for large scale work can be looked at under the principle of
Multiples e.g. some production processes need more than one machine to create an end product or
just to be fully efficient.
Internal diseconomies of scale transpire when firms become too large and inefficient. As the firm
increases production eventually the average costs begin to

Economies of Scale
The Economies and Diseconomies of Scale and Scope
Introduction
Most of the company's strategy in remaining to be competitive is trying to differentiate and get over
its rivals which has the intentions of realizing the preferred seller and will have the highest returns
into the industry. Thus, the choice of the firm had been affected relatively to the minimum efficient
scale and the major issues that had been tackled to this issue are the economies and diseconomies of
scale and scope (Forgang and Einolf, 2007, p. 151). Economies of Scale and Scope The economies
of scale exist by the increase of the output of the goods through additional units while the costs
decrease. On the other hand, the ... Show more content on Helpwriting.net ...
The example of this approach is the location of the independent controlled donut that can choose to
offer the high wages in the charge of higher prices in the affluent area. It can also have the combo
promotion for choosing the market cinnamon in the apple cider are available in the bargain market
as controlled by the customization. There are also evidences that the diseconomies of scale occurs in
the research and development of the pharmaceutical companies wherein outweighing the
combination of R and D and the great driver for the efficiency for the strategic importance that
cause of difficulties in managing and monitoring for the complex departments. The economies of
scale can also occur in outside the firm wherein the larger business can put the pressures to its
suppliers for the labour and raw materials so that it raise inputs on the prices. These regulations can
be tighter for the bigger firms which can be result of the industry regulations and to the economies
of scale (Money Terms, 2008).
The advantages of the diseconomies of scale or the increase in the plant size to the company is the
effect to the product cost whereas the increase in the activity can make the possible for the firm in
employing specialize labour and sufficient production. In this regard, it can improve the quality of
the jobs that are performed by the general and unskilled worker. Thus, the better and more output
can

Economies of Scale
Introduction
The conditions proposed by the financial crisis and international markets have ended up affecting
the practice of economies and shared frames of reference on the nature of the problems. A minor
phenomenon in Bangladesh can have substantial impacts in New York or London. The scale and
size categories have become central to the analysis of what is happening. Institutional sizes are
related to risk externalities [Makridakis / Taleb, 2009]. The work produced [Haug, 2007; May, 2008]
offer an explanation of the consequences to take extreme risks in economies (extreme risk). Even
considering the risk corresponds to the capital (original) external losses can become outrageous.
Background
Studies reveal a context in which ... Show more content on Helpwriting.net ...
The crisis resulting from the excessive size of the banking sector has also contributed to increased
externality (negative) with costs experienced by most people.
In this regard Taleb / Tapiero [2009] consider that it is inefficient markets with negative externalities
to a considerable extent, even though they have ideal conditions of competition (perfect financial
markets). In any firm if negative externalities are not offset by positive externalities, or adequately
regulated, the risk of losses can become outrageous. In a New York Times (Sunday Business
section, October 4, 2009), Gretchen Morgension reference to research by Dean Baker and Travis
McArthur, described the effects of selective failures that allowed some privileged banks (large) were
"subsidized" with costs above $ 34 million annually.
Size is not the medicine when firms fail. For example, Fujian [2004], using a list of broken Japanese
companies in 1997 ([Bouchaud, 2003]) has drawn the failure of some firms regardless of size. When
business growth is supported by debt to risk exposed is superior because it threatens both the
creditor losses as the lender. Size growth combined with rising debt can lead to colossal failures. It's
like traveling with suicide pilots that guide aircraft dynamited. By taking unsustainable growth
strategies with negative externalities, people end up paying higher costs.
Networks and supply chains

Summary Of Adam Smith And David Ricardo
Adam Smith and Principles of Economics by David Ricardo represented the formulation of
international trade theories. To Adam Smith it was the absolute advantage of one country. Also, the
labor side in Smith opinion that reduces the cost of production, and that would ensure
competitiveness in the international markets. David Ricardo expressed basic assumptions of the
trade theory. Free trade theory, as opposed to Mercantilists trade protection, was supported by Adam
Smith and David Ricardo. For Smith and Ricardo free was mechanism to increase the productive
efficiency at global level. Ricardo's cost calculation was based on labor hours factor on production.
In Ricardo model, there were two commodities and production of that were subjected to constant
returns to scale. Comparative advantage was considered to increase and befit from trade. Ricardo's
indicate specialization ... Show more content on Helpwriting.net ...
When demand elasticity for the same good is different in different countries, there is a possibility of
subsidized exporting of goods. There is one more possibility that there are some countries that are
historically above others and have a cost advantage of producing some goods, and they can offer
products at lower price than others. In such as a situation, countries will provide subsidies to
industries whose cost of production is high to enable them to obtain the benefit of scale economies.
This will pave ways for advanced countries to follow aggressive strategic trade. Sunanda Sen wrote,
It was generally recognized that the "vagaries of history" rather than resources determine what a
country produces and exports. Thus the role of "history and accident" were both considered crucial
in determining the location of an industry in the world map (Krugman 1994)(Sunanda Sen,2010).
Economists suggested that the government comes forward to shift resources from sunset industries
to sunrise industry to produce high–value

Economies Of Scale Essay
5.6 Economies of scale
Economies of scale are a Micro economics concept. Economies of scale give a cost benefit to an
organization that produces goods in a very large scale. The cost per unit decreases as the production/
sales increases. This is because a firm may incur certain fixed cost which when apportioned to large
units volume decreases the unit cost of a product. The Table below better illustrates the concept.
Let's take an example of cool drink manufacturer.
Table 5.4 Economies of scale
Costs Production – 1000 Units per day Production – 10,000 Units per day Production – 1,00,000
Units per day
Fixed Cost (Rent, Salaries, Interest on loan etc) 1,00,000 1,00,000 1,00,000
Variable Cost per Unit (Bottling cost, raw material etc) 10 10 10 ... Show more content on
Helpwriting.net ...
Role of economies of scale in business strategy and competitive advantage:
One of the main sources for a firm to attain cost leadership advantage is through economies of scale.
There are many chances for a manufacturing unit to bring down its cost through large scale
production. Cost can be reduced through maximum utilization of the plant, machinery and
warehouses. Standardized products can be manufactured in large scale to bring down the cost of a
product. Usually when a firm enters in large scale production they cut down on the variations to the
models and concentrates on standardizing the product and marketing it across the globe.
A firm gets significant advantage through economies of scale when it has multinational operations.
The firm can set up its manufacturing units in low cost center and distribute its products across its
market. Though the market for the company's products can be worldwide, all the products can be
manufactured in one or fewer units in the places where the company has maximum of location
advantage and distributed across the

Example Of Diseconomies Of Scale
Diseconomies of scale
The Economic theory tells that a firm may become less efficient if it becomes large. The additional
costs of being larger are called diseconomies of scale.
The Diseconomies of scale gives us a result in rising long run average costs which are experienced
when a firm expands beyond its optimum scale, at Q. Examples of diseconomies include:
1. Larger firms often suffer poor communication because they find it difficult to maintain an
effective flow of information between departments and subsidiaries. For example, a huge
supermarket chain may be less responsive to changing tastes and fashions than a much smaller or
local retailer.
2. 'X' inefficiency is the loss of management efficiency that occurs when firms become large and
operate in uncompetitive kind of markets. Such loses of efficiency includes the over paying for
resources, lets ... Show more content on Helpwriting.net ...
methods to control diseconomies of scale
Big firms often face huge organisational difficulties that can slow them down and cause costs and
problems. So I was into a BBC article the big businesses learning how to think small which
appeared soon after Steve Jobs' death. His insistence on "no committees" and talking to everyone at
least once inaevery week was, he said, that is more enough to keep Apple more productive, efficient
and successful in terms.
I don't know if that's true, but for big organisations, with their vast and varied resources and
bewildering bureaucracy, operating with the attitude of a technology start–up is a distant dream.
Poorly handled communication skills set, the low levels of motivation prevailing and a shortage of
innovative ideas are classic diseconomies of scale that are typical of larger organisations.
The article quotes the general manager of Walker's Crisps, part of global giant PepsiCo:
"Start–ups try, they fail, they adapt, they move on. They try, they fail, they adapt, they move on. In
our marketing, we tend to make a campaign, put it out there and hope it

Tesla Swot Analysis
Tesla Motors: SWOT Analysis Tesla Motors designs, develops, manufactures and sells high
performance fully electric vehicles, advanced electric vehicle, powertrain components and
stationary energy storage systems. Political, economic, socio–cultural and technological factors have
influenced Tesla in complex ways since Tesla is a big player in the EV industry – one of the non–
traditional automobile industry segments. The political factors have mostly favored Tesla since the
government gives subsidies, tax rebates for EV manufacture. The general economic growth in the
US economy have favored Tesla but decreasing oil prices and increasing labor prices have acted as
threats to Tesla. The go green concepts have favored Tesla but ... Show more content on
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Reduction of battery costs by 10% in next year and price of cars by 10% next year This will help in
removing threats from competitors when these benefits are passed on to the customers by way of
lower prices of cars The above strategies are rated highest and is selected since they focus on
rectification of weakness of lower economies of scale of operations, production delays of Tesla and
at the same time advocate the use of innovative technology to create newer and more variety of EVS
which will help the increasing the sales. The strategies also focus on removing threats from
competitors by way of greater product differentiation and higher economies of scale. These are
analyzed in a more detailed way as given below * Satisfies the core competences of using
innovations in technology which is one of the main core competencies of Tesla. This in turn helps in
increasing the sales volume of Tesla * Takes into account product differentiation and aims at
competitive advantage by way of newer designs which will help in removing the threats from
competitors. * These strategies focus on rectification of the weakness of Tesla by providing metrics
for eliminating the production delays, small quantity and choices of cars and expensive cars with
high battery costs by way of increasing the production volume and

Computer Industry
Computer Industry Analysis
"Laptop prices hit new low"
Summary:
The article "Laptop prices hit new lows" by Gary McWilliams focuses on the computer industry,
and how prices have evolved during past 5 years, specifically 2001–2005. The article reports that
the prices of laptop computers have decrease substantially over the past 5 years.
The average price for a laptop hit a new low in 2005 of about $1000; a decrease of about $250 from
last year, and more than $600 from year 2001. In the past the demand for laptop computers
comprised only of businesspeople. Now, college students ' demand represents a considerable
percentage of the total demand for laptop computers. While in the past a laptop computer was
considered a luxury, students ... Show more content on Helpwriting.net ...
With a larger scale of production companies are applying better organizational skills to its resources,
such as straightforward chain of command, and by this the range where the marginal product is
positive would be greatly increased. Similar to improved organization and technique, the learning
processes related to production, selling and distribution result in increased efficiency.
In industries that are capital and research intensive such as the computer industry, efficiency
requires large if not very large–scale operation. For such industries, the main source of scale
economies is new product development costs or new, cheaper ways of production costs; spreading
those huge costs over an increased number of units result in increased efficiency and in the end
lower costs for end users/consumers.
AMD and Intel both face tremendous economies of scale. The cost of building the first chip of a
new design may in the billions of dollars, if one includes the cost of building the manufacturing
facility, and the research and development costs. However, the more chips that are produced of a
given design, the lower the average cost.
Another reason for the significantly drop in price can be the adoption of the demand–driven or
built–to–order production system. The direct

Solving Economies Of Scale And Scope
I. Short Answer (No more than one paragraph) 1. Define economies of scale, and provide an
example of a telecommunications product or services that is currently thought to exhibit this
economic characteristic. Repeat for economies of scope.  Economies of Scale is a phenomenon
which can be described as diminishing cost per unit as a result of increased output.  Economies of
scope can be described as a phenomenon where a single provider produces multiple goods or
services and earns returns from different markets simultaneously out of which some may be
regulated and some may be unregulated.  An example to explain economies of scale and scope can
be Cisco products. Cisco offers Cloud services, phones as well as produces network devices and
offers support for all its products. This is an example of Economies of scope.  An example of
Economies of scale can be the cloud services where cisco lays down the network and data centers
which comprise of major investment in infrastructure and more the number of consumers for the
cloud, lesser is the cost per unit storage. II. Medium Answer (1–2 paragraphs) 1. Suppose a rate–of–
return regulated local telephone company provides IP Voice Trunking as a regulated service in
competition to Level 3 and TW Telecom. Explain how this telephone company, who is not
experiencing much competition in its market for local telephony, might want to allocate the costs for
this service, and the economic rationale for its approach. Characteristics of

Examples Of Diseconomies Of Scale
Diseconomies of scale
The Economic theory tells that a firm may become less efficient if it becomes large. The additional
costs of being larger are called diseconomies of scale.
The Diseconomies of scale gives us a result in rising long run average costs which are experienced
when a firm expands beyond its optimum scale, at Q. Examples of diseconomies include:
1. Larger firms often suffer poor communication because they find it difficult to maintain an
effective flow of information between departments and subsidiaries. For example, a huge
supermarket chain may be less responsive to changing tastes and fashions than a much smaller or
local retailer.
2. 'X' inefficiency is the loss of management efficiency that occurs when firms become large and
operate in uncompetitive kind of markets. Such loses of efficiency includes the over paying for
resources, lets ... Show more content on Helpwriting.net ...
methods to control diseconomies of scale
Big firms often face huge organisational difficulties that can slow them down and cause costs and
problems. So I was into a BBC article the big businesses learning how to think small which
appeared soon after Steve Jobs' death. His insistence on "no committees" and talking to everyone at
least once in a every week was, he said, that is more enough to keep Apple more productive,
efficient and successful in terms.
I don't know if that's true, but for big organisations, with their vast and varied resources and
bewildering bureaucracy, operating with the attitude of a technology start–up is a distant dream.
Poorly handled communication skills set, the low levels of motivation prevailing and a shortage of
innovative ideas are classic diseconomies of scale that are typical of larger organisations.
The article quotes the general manager of Walker's Crisps, part of global giant PepsiCo:
"Start–ups try, they fail, they adapt, they move on. They try, they fail, they adapt, they move on. In
our marketing, we tend to make a campaign, put it out there and hope it

Movie Review : ' Twilight Movies ' And ' The Whole Of The...
hey guys dunes this is Jacob Clippard welcome to ac/dc econ one of the 0:03 Twilight movies the
Harry Potter movies and the whole or in the Rings trilogy 0:07 haven 't gotten there are based on
books right so they all had economies of scale 0:11 before you jump into it keep in mind that
economist differentiate between the 0:20 short run in the long run in the short run at least one input
or resource in 0:25 the production process is fixed I made a video about it check it out in this 0:28
video I 'm gonna talk about corruption in the long run when all resources are 0:31 variable and let 's
start by looking at what happens that output as a company as 0:35 more and more resources if a
firmware to double its inputs there 's only three 0:38 possible thing that could happen to output there
are more than double it 0:42 could double or less than double that the idea of returns to scale if
output 0:47 more than doubles that affirms experiencing increasing returns to scale 0:50 because
getting bigger is better 0:52 this happens because they can use mass production techniques that
smaller firms 0:55 can 't not output doubles than that company has constant returns to scale it 0:59
kind of maxed out on the gains of getting bigger 1:02 output less than doubles then they 're
experiencing decreasing returns to scale 1:06 they 're just too big so return to scale show what
happened to production in the 1:09 long run 1:10 what happens the cops the TV show how it 's made
it shows how companies

Difference Between Adam Smith And David Ricardo
Introduction
Wealth of Nations (1776) by Adam Smith and Principles of Economics (1951) by David Ricardo
heralded the formulation international trade theories. To Adam Smith it was the division of labor
that reduces cost production and that would ensure competitiveness in the international markets.
Smith contended that the problem of monetary adjustment to countries having continuous trade
surplus could be solved by automatic adjustments. Basic premises of the trade theory were
formulated by David Ricardo. Free trade theory as opposed to Mercantilists trade protection was
championed by Adam Smith and David Ricardo. For Smith and Ricardo free was mechanism to
increase the productive efficiency at global level. Ricardo's cost calculation was based ... Show
more content on Helpwriting.net ...
When demand elasticity for the same good is different in different countries there is a possibility of
subsidized exporting of goods. There is one more possibility that there are some countries that are
historically above others and have cost advantage of producing some goods and they can offer
goods at lower price than others. In such as situation countries will provide subsidies to industries
whose cost of production is high to enable them to reap the benefit of scale economies. This will
pave ways for advanced countries to follow aggressive strategic trade. A vagary of history
determines what a country produces and exports rather the resources available. History and accident
play a crucial role in determining the location of production in the world map Krugman, 1994).
Economists suggested that government come forward to shift resources from sunset industries to
sunrise industry to produce high value products.
Both the traditional free trade version and new international trade theories failed address the
dynamic implication of trade opening in terms of economic development and growth of the training
partners, especially so for the developing countries. Unrealistic classical and more realistic new
version of trade theories failed to address the issue of economic development and growth which
include, "viewing change by comparing static equilibrium states, rather than as a process occurring
in historical irreversible time (Bhattacharjea

Implicit And Implicit Cost
Introduction
In this written assignment, I am going to explain the difference between implicit and explicit costs.
Also, I will provide two examples of when an explicit cost is different from an implicit cost. In
addition, I will explain the difference between accounting and economic profit and provide two
examples of when they differ.Finally, I will explain the difference between economies and
diseconomies of scale and provide examples of when an actual firm might benefit from economies
of scale or be harmed by diseconomies of scale.
Explain the difference between implicit and explicit cost
Explicit cost is the revenue coming into to a business minus the costs.For example, a pizza parlor,
the cost includes,workers to run the business, ovens to cook the pizza, and ingredients to make the
pizza. Accountants usually look at the expenses for a business in this manner the revenue minus the
explicit costs. ... Show more content on Helpwriting.net ...
An example, a student graduates from High School and starts to work at a local retail store and
earns $1500 a month. The student has bills to pay, such as phone, car, and rent which is a total of
$1000 a month. (Explicit cost). The student still has $500 to spare, not too bad of earning for a high
school graduate. But, if you factor in the implicit cost, if the student graduated from college, he
would be making double $3500 a month. In this case, the student is losing $2500, which he would
have had if he graduated from college.
Give two examples of when an explicit cost is different from implicit

Advantages And Disadvantages Of Economies Of Scale
ECONOMIES OF SCALE
In microeconomics, economies of scale can be defined as a scale which is there when lager output is
obtained with the lower per unit cost this is because the fixed cost is spread over the more units
produced or generated.
The phenomenon of economies of scale is being used by various organisations and business firms in
the sectors like manufacturing plants or the entire unit.
Need for economies of scales:–
The large scale business can cut down their selling prices in the market which can increase the sales
of their product and the as well as the increase in the market share. This increases threat to the low
scale businesses which can be undercut in the market.
Secondly, a business can stick to its current but can earn ... Show more content on Helpwriting.net
...
Thus, they require very less time or labor hours to generate the same amount of any output which ay
were earlier producing by using even more labor hours. Managers which are involved in the
management and scheduling of a production process also get familiar with a process and are thus in
better position to use a resources at air disposal in better manner as well as scheduling a production
process more efficiently thus leading to more output for a same amount of

Case Study On Economies Of Scale
ECONOMIES OF SCALE : Case Studies & Examples
Economies of scale occur when increased output leads to lower unit costs (lower average costs) This
diagram shows that as the firm's output increased from Q1 to Q2 , average costs fall from AC1 to
AC2
Examples:–
Tap Water – High Fixed costs of a national network
The water companies had to invest in a large network of water pipes spreading without the country
to produce tap water. This investment has a very high fixed cost. Nevertheless, as they distribute
water to over 25 million households it brings the average cost down. But, would it be worth for an
another water company building another network of water pipes to compete with the existing
company? No, because they will be getting only a small share of the ... Show more content on
Helpwriting.net ...
The aim of the study was to determine what factors affect economies of scale in waste management,
identify the gaps in knowledge/data if any with a modelling approach review where local authority
waste production is sufficient to deliver an value added waste management solutions.
EVIDENCE BASE
To analyze the factors that are influencing optimized waste management services, it was necessary
to establish a robust evidence base from Government reports , local authority reviews & waste
management technology analysiss. Each of the reports & studies considered differing factors to
achieving economies of scale, & provided a broader range of influencing variables including the
following:
Political
Dem&s & Constraints
Economic & Financial
Legislative

Chandler's Model of Large-Scale, Integrated Managerial...
To what extent can Chandler's model of large–scale, integrated managerial enterprise explain the
long–term competitiveness of leading economies?
Chandler`s model of large–scale enterprises is a way from and shift away from the 'invisible hand'
model given by Adam Smith. Chandler`s model is an attempt to explain the developments in the
second phase of industrial revolution where he tends to reason behind the enhancement of capital. In
this context, he gave the concept of modern industrial enterprise, which according to him grew in
three phases. That is, there were investments in the production facilities, mostly the ones with
technological potential to produce economies of scale and the economies of scope, ... Show more
content on Helpwriting.net ...
Various heads of these departments alongside a board and an assigned president then made decisions
for the organization thereby adding a 'visible hand' to the affairs of the organization leading the
enterprise in a set direction. Another point to be taken under consideration here is that an industrial
enterprise, in addition to the functional units, also expanded in other ways. There were defensive
expansion trends i.e. horizontal or vertical expansion, and the offensive ones, i.e. geographical and
product diversification. Further evolution in the industrial enterprise led to performance monitoring
measures i.e. inclusion of a long–term and innovative corporate strategy with middle and the top
management being the sole decision makers. However, with labor intensive industries i.e. printing
or textiles, they don`t offer a competitive advantage for the integrated enterprises (Chandler &
Montgomery 1979: 71). Therefore, in these cases, mass retailers tend to dominate with large
purchasing units while eliminating other intermediaries.
In order to further explain the argument, the case of United States as stipulated via theoretical
paradigms given by Chandler can be discussed. According to the theory, USA precludes to
competitive managerial capitalism which implies that there is an oligopolistic competition

Paul Krugman 's New Trade Theory
Paul Krugman
Paul Krugman is well known for his New Trade Theory, International Trade Theory, and for his
weekly columns in The New York Times. Krugman has written over a dozen books and textbooks
explaining economics for a general audience. Krugman is a Professor of Economics and
International Affairs at Woodrow Wilson School of Public and International Affairs at Princeton
University and Centenary Professor at London School of Economics. What is critical in Krugman's
approach is he united two fields, which traditionally are separated– trade and geography. He has
found a way to explain some issues in economic geography by using the trade theory. He won a The
Sveriges Riksbank Prize in Economic Science in Memory of Alfred Nobel 2008 for his New Trade
Theory and New Economic Geography. By examining the effects of economies of scale on
consumers' goods and services he is able to explain the patterns of international trade and the
geographic concentration of wealth.
Krugman vouches that the economy isn't like a family that earns or spends a certain amount of
money there's no relation between the two. "Your spending is my income, and my spending is your
income". If the people stop spending money, there's a depressed economy, although some people
would be spending money, it wouldn't be enough to save the economy causing unemployment to
rise. When there's a depressed economy the government isn't in competition with the private sector
so the government doesn't use resources that

Decision to Move into an International Market
Terms and Definitions Upon a company making the decision to move into an international market
there are many economic terms, definitions and laws that are to be researched and understood.
While there are lots of terms and definitions, five of these terms include: multinational corporations,
economies of scale, imports and exports as part of GDP, foreign exchange market and exchange
rates and marginal rate of transformation. Each definition will be researched and defined below and
their importance to a company going global will be discussed.
Multinational Corporations
A multinational corporation or a "MNC" can be defined as a company operating in at least one other
country besides its home country. A MNC can be a closed system, in which it produces within said
country and sells to that country only. Most MNC's, though, are open systems in which they produce
in one country and sell to another. MNC's are driven by the law of supply and demand. Supply and
demand affect open systems differently as labor is in one country and the selling of products in
another and the cycle of products is on a much larger scale. A company looking to become
international, if incorporated, will become a multinational corporation.
II. Economies of Scale A. Factors that cause the cost of producing something to fall as the scale of
its output increases are known as economies of scale. An example is it might cost $5000 to produce
200 copies of a book but only $6000 to produce

External Economies Of Scale Occur
External economies of scale occur when the cost per unit depend on the size of the industry but not
necessarily on the size of any one firm(Krugman et al,2015:179).It also consists of potential
reduction of average cost associated with higher level of productivity. Often differences between
countries and economies of creating the need to trade, as thus economies of scale make it
advantageous for each country to specialize in the production of an only limited range of goods and
services (Krugman et al,2015).In understanding the significance of economies of scale ,Adam smith
postulates that each country could produce one or more commodities at a lower cost than its trading
partners .It then follows that each country will benefit from specialization, this pattern of trade often
reflect a created comparative advantage meaning that a country can produce at a lower cost than the
other country (Theo S et al,2009).A large of production is more efficient, the cost per unit of output
falls, while the industry increases production as a result it encourages trade amongst countries.
Discuss the Role of external economies
External economies of scale occur when the cost per unit depends on the size of the industry but not
necessarily the size of an individual firm (Krugman et al, 2015) they are most likely to arise when
firms operate in the same region. External Economies of scale often lead to industry cluster, that is,
Group of similar and related firms in a defined geographic area

Demand, Supply, Price Ceilings And Price Floors
Demand, Supply, Price Ceilings and Price Floors (1) Using graphical illustrations explain consumer
surplus Consumer surplus can be defined as the difference between the maximum price that a
consumer is willing to pay for a good and what is actually paid for the good. This is measured by
the vertical distance between the demand curve and the price line (2) Describe the following: a.
Inferior Good An Inferior Good can be easily described as good decreases in demand as consumer
income rises. (e.g. No–Name cereals & cheap frozen dinners) b. Giffen Good A Giffen good is a
special type of Inferior good and can be described as one where when prices raises so does the
demand for the good.(e.g. When the price of basic white bread increase and you cannot afford to
buy whole–wheat bread, you have to buy the white bread at the higher price. c. Veblen Good A
Veblen Good is a good which is similar to a Giffen Good and is also known as a "snob effect". A
Veblen good can therefore be defined as a good where when price rises so does demand. This is so
because people tend to think the higher the price the better the quality. (e.g. Designer Clothes) (3)
Distinguish between price ceilings and price floors Price Ceiling and Price Floor are two types of
price control mechanisms. Price Ceiling is the maximum price of a good or service which is
determined by the government (e.g. Old Age Pension). Price Floor is the opposite which means it is
simply the minimum

What Is The Role Of State Financial Companies In The...
Anilkumar (2002), in his article, "The Role of State Financial Corporations (SFCs) in Financing SSI
in India in the midst of Post–Reform Period", pointed out that SFCs should attempt attempts to give
propels approved and administered to little scale range in light of the way that the issues of little
scale fragment were totally one of a kind in connection to the medium–scale part. The SFCs should
attempt attempts to approve the advances in a balanced path for different purposes. More
complement should be given to little evaluated characterization of advances since it would help in
propelling business venture change in the country which was the need of incredible significance.
Balasubramanian N. (2005) in this article dives into the present ... Show more content on
Helpwriting.net ...
In his book (Prasad C. S., 2004) has predicted the vision of SMEs up to 2012, regarding the
employment generation and open economic development of trade from India. The author explained
that due to Liberalization, Globalization and WTO a rethinking is being made to analyse the targets
before the SMEs sector. The author suggested that with the inherent advantage of flexibility and
innovativeness of the sector, the major constraints of economies of scale could be met by adopting
the cluster development and formulation of appropriate policies. The book is based on the
compilation of the various articles of the author published in different journals on the theme of
WTO and SMEs, SMEs financing, SMEs policy, Employment Generation in SMEs and Export
potential and cluster development among SMEs etc. Kamal K. Mainedheen (2005) examined the
explanations behind disappointments of miniaturized scale ventures in provincial ranges in
Maharashtra. He drilled down the accompanying as the significant causes in his exploration think
about: Illiteracy of the business people prompts numerous challenges and reliance on others. Lack
of family bolster and the de–rousing Poor rustic economy and falling behind of the expending limit
of country mass. Rathod, C. B. (2007)32 portrayed the significance of

Big Firms And Small Firms
Progressively, to an increasing extent, professionals in the financial world are beginning to recruit
smaller firms as opposed to the conventional recruitment of large firm with monetary benefits, tax
deductions and other motivations (Gort et al, 1982). This approach has two features: Firstly,
developing and supporting entrepreneurs and small businesses, secondly, expanding/ improving
infrastructure and to recruit a highly experienced and educated workforce (Gruber, 1995). These
efforts depend on improving the quality of life in the community and generating an attractive
business climate. Studies from economic development strategies aimed at attracting large firms are
likely to be successful only at high cost (Grabowski, 1968). The ... Show more content on
Helpwriting.net ...
Large firms enjoy cost advantage under economies of scale; here they are able to reduce their
average cost (AC) per unit as they increase total output. This basically means there is an increase in
the cost of production for the large firm and an increase in output, promoting growth. As a result of
cost advantage the large firms also enjoy managerial economies (Besanko et al, 2013). Under
managerial economies, the firms can afford to hire specialists in different departments such as:
human resource, marketing and finance within the firm. Additionally, large firms may benefit from
market power, since they will have more control over their suppliers and customers. It is mostly
assumed that economies of scale cannot be applied to small businesses since they are less likely to
be involved in mass production. Certain studies show that it can be applied to small businesses in
some cases. Small firms could benefit from economies of scale through buying of services. For
instance, if a small firm hires an accountant to go through its account, the accountant uses only a
small portion of his/her time and the firm pays only a small part of his or her time (Begg et al,
2013). On the other hand, large businesses suffer from diseconomies of scale. These are
inadequacies that occur as a result of a firm operating on a large scale. In large businesses, the
workers may feel unappreciated as individuals. This could make

Comparison of the Concept of Economies of Scale with...
Compare the concept of economies of scale with economies of scope. Both concepts have same
principle which is to lower the production cost, cost savings and increase the marketing competitive
advantage in order to gain the high return. However, they have different approach and strategy to
save cost and increase return. The concept of economies of scale is cost savings that accrue from
increases or expands in size or number. If two plants produce same unit, unit cost are lower in a
large plant than in a small plant. Also, unit cost are lower in a large distribution center than in a
small one, lower for large–volume purchases of components than for small–volume purchases. If
firms are interested in getting or staying large, there are ... Show more content on Helpwriting.net ...
Most of time, when the price goes down, the sales will increases sufficiently. Then the total
revenues increase accordingly. Yet, the firm's total revenues will decrease when the price go down in
sometimes. The price elasticity of demand at price (P) and quantity (Q) is approximately the
percentage change in quantity divided by the percentage change in price: ?Q/Q÷?P/P=(P/Q)(?Q/?P).
The elasticity is invariant to change in scale of either price or quantity as the elasticity is the ratio of
two percentage terms. Therefore, whilst the company' revenues are currently covered by total costs.
And total revenue (TR) is equal to price (P) times quantity (Q). If the demand of this product is
inelastic which is a 5% reduction in the price of the

Impact Of Global Capitalism On The World Economy
Although there is no single theory to explain the spatial organisation of production regions in the
world economy, we continue to see core–periphery patterns and concentrations of activities in
specific areas despite powerful forces of globalisation expanding markets and integrating
economies. This has created a huge globally expansive network of information, capital and technical
flows across regions facilitated through market liberalization, border reductions between countries
and the erosion of particular places. The presence of economies of scale, scope and agglomeration
play significant roles in explaining the concentration and development of economic activity in
particular areas. These forces of concentration and dispersal even in the context of the expanding
territorial scope of global capitalism, still remain powerful and we continue to observe the
importance of place under globalisation (Massey 1984). Although natural environmental conditions
are influential in the development of regions, capitalism is the dominant form of contemporary
economic organisation due to historical geography. Indeed, the capitalist word economy is
structured around the dynamics of specialisation and the division of labour, whereby countries
produce and trade goods and services where they obtain comparative, competitive advantage and
lowest opportunity cost. In a capitalist economy specialisation (the act of focusing on a specific
work task) leads to higher productivity, output and product

Economies Of Scale Makes A Company A Better Company
Nowadays, companies want to expand as much as possible. This is shown by the increases in the
number of product lines, and the expansion to new geographical markets. However, does it really
make the company better off to expand? In other words, is a bigger company a better company? The
concept of economies of scale plays an important role in answering this question. Economies of
scale is "the effect on average costs of production of different rates of output, per unit of time, of a
given commodity, when all possible adaptations have been carried out to make production at each
scale as efficient as possible" (Silberston, 1972). Consequently, the higher the output, the lower
average costs per product. However, does this reduction in average costs make the company a better
company?
An important source of economies of scale is the division of labor (Smith, 1776/1991). The division
of labor can be seen as specialization. Each employee specializes on a certain step in the production
process. In this case, the company can produce more units of output than they could have produced
when every employee would have produced an entire product. The company is more efficient, and
as a result, their average costs are lower with a high level of output. The division of labor is
therefore an important source of economies of scale. The division of labor enables the firm to
produce more units of output, have lower average costs, and therefore have a higher profit margin.
All these components

Cost of Production
Costs of Production
July 2011
Topics to be Discussed
Measuring Cost: Which Costs Matter? How do Cost Curves Behave? – Cost in the Short Run – Cost
in the Long Run How to Minimize Cost? How to draw Implications for Business Strategy?
Topics to be Discussed
Production with Two Outputs: Economies of Scope Dynamic Changes in Costs: The Learning
Curve Estimating and Predicting Cost
Measuring Cost: Which Costs Matter? Accountants tend to take a retrospective view of firms'
costs, whereas economists tend to take a forward–looking view Accounting Cost – Actual expenses
plus depreciation charges for capital equipment Economic Cost – Cost to a firm of utilizing
economic resources in production, including opportunity cost
Costs ... Show more content on Helpwriting.net ...
HOW does it MOVE? Extent of Rise in Cost Depends on the nature of the PRODUCTION
PROCESS – Extent to which production involves DIMINSHING RETURNS to VARIABLE
FACTORS If MARGINAL PRODUCT OF LABOUR DECREASES significantly as more labor is
hired – Costs of production increase rapidly – Greater and greater expenditures must be made to
produce more output
Determinants of Short Run Costs
Assume Labour: only Variable Input Assume the wage rate (w) is fixed relative to the number of
workers hired Variable costs is the per unit cost of extra labor times the amount of extra labor: wL
∆VC w∆L MC = = ∆Q ∆Q
A Firm's Short Run Costs
Inference: MC decreases initially with increasing returns (0 through 4 units of output) MC increases
with decreasing returns (5 through 11 units of output)

TC
Cost 400
($ per year)
300
Total cost is the vertical sum of FC and VC.
VC
200
Variable cost increases with production and the rate varies with increasing and decreasing returns.
100

Implicit Cost Of An Explicit Cost Essay
A) Explicit costs are expenses/payments that are actually made and frequently recorded. They
mirror payment for a business transaction such as salaries, rent, and utilities.(OpenStax Economics,
2016). Implicit costs being intangible are not frequently recorded. This sort of cost mirrors a
potential opportunity, advantages, or points of interest that may have happened in a given
circumstance. (OpenStax Economics, 2016)
EXAMPLES OF WHEN AN EXPLICIT COST IS DIFFERENT FROM AN IMPLICIT COST
1. Implicit costs are expenses connected with utilizing a company 's fixed assets and resources
already owned without paying to utilize those assets. They are opportunity expenses or costs that
originate from utilizing internal resources instead of leasing or renting them, with the organization
surrendering the chance to profiting from the use of those assets and resources so utilized. Cases of
Implicit cost include entrepreneurs renouncing getting a pay, or using their own space for business
purposes freely as opposed to leasing it to earn more income. Organizations can decide whether to
incorporate implicit expenses as potential wellsprings of income. Utilizing your basement or garage
as a wholesale for your home based business without leasing or renting it to your home based
business incurs an implicit cost. (OpenStax Economics, 2016)
Explicit costs, however, are immediate payments made during the course of business or during
business exchanges. This kind of cost obliges organizations to

The impact of economies and diseconomies of scale Tesco face
The impact of economies and diseconomies of scale Tesco face
As businesses grow and their output increases, they commonly benefit from a reduction in average
costs of production. Total costs will increase with increases in output, but the cost of producing each
unit falls as output increases. This reduction in average costs is what gives larger firms a
competitive advantage over smaller firms. This fall in average costs as output increases is known as
Economies of
Scale.
Tesco benefit from economies of scale because they are constantly opening new stores around the
country, such as their new store in
Stockport. Therefore, they are always increasing their output, and so benefit from lower average
costs. That is why Tesco seem ... Show more content on Helpwriting.net ...
Another way in which they benefit is whit their building contractors who build their stores. They
give them lower prices as they are buying in bulk
(building so many new stores), and are hence benfiting from economies of scale in this way. The
final way in which Tesco may benfit from economies of scale is because they build such large
stores, the government gives them cash incentives to build their new supermarkets on Brownfield
sites, which were previously unused.
There are several different categories under which Tesco benefit from economies of scale. One of
these internal economies of scale is purchasing. As Tesco continue to grow, they increase the size of
their orders for raw materials. This results in the cost of each individual component purchased will
fall. This will therefore reduce the average cost of production.
Another internal economy of scale from which Tesco benefit is technical. As they grow, they are
able to use the latest equipment and incorporate new methods of production. An example of is their
new self–service checkouts from which people can purchases their goods from a machine using a
scanner. This increases efficiency and productivity, reducing average costs of output because it
means they don't have to employ as many workers.
Other internal economies of scale include finances, because Tesco have enough financial backing, it
means they do not have

Economies Of Scale And Scope
Economies of Scope:
Economies of scale and scope help producers lower their cost by producing the next unit of output
at lower costs this trend continues until production reaches a level of diseconomies of scale where
production is no longer running as efficient as it should. This tends to increase the barriers to entry
for new competitors as when they enter the market they will experience a higher cost of production.
Why? Solely because they have smaller economies of scale and cannot afford to sell the product at
the same price as other much larger firms. Generally, economies of scale and scope positively affect
General Electric. Since General Electric is one of the biggest conglomerates in the world it has the
opportunity to offer products and services through the same organization. These products might be
highly unalike but due to the wide range of businesses covered by GE the prospect is there. For
example, GE, in order to continue a healthy relationship with valued customers, has allowed the
multimillion dollar purchase of its jet engines to be financed over long periods of time. The catch is
that these finance opportunities are usually done via a leasing arrangement from GE Finance. In
recent year GE has pursued a service strategy when it comes to selling aircraft engines. They sell
what they call "power by the hour" this enables the private firm to indirectly rent the engine
turbines, in return the firm would award GE with maintenance contracts on the engines. This

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