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Which would contribute most to a firm experiencing economies of scale?
Wiki User
∙ 10y ago
specialization of production within the firm (double check me)
Wiki User
∙ 10y ago
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What are external economies?
Internal economies of scale arise when firms increase their scale of production. Hence, they incur lower average costs of production, either through specialization or other factors. When average costs fall, giving the price of the good to be constant, profit margins of these firms will be increased. Thus, the individual firm benefits from internal economies of scale. External economies of scale arise when all firms in an industry experience decreasing average costs of production, which can be due to economies of concentration, information and disintegration. Unlike internal economies of scale, external economies of scales independent on the size of the individual firms in the industry as both small and large firms benefit from it. Secondly, internal and external economies of scale depend on several factors. Internal economies of scale arise due to technical economies, which states that as a firm increases its scale of production, it is able to delegate specific jobs to its workers. Hence, through specialization in a single job, the workers are able to improve their productivity through attaining higher levels of dexterity and skill through repeated practices. Thus when productivity per worker rises, the firm is actually producing a greater amount of goods and hence, the average cost of the good falls. Of course, internal economies of scale also depend on other factors, such as marketing economies, which basically states that a firm making bulk purchases on raw materials would be able to enjoy cheaper prices, such as financial economies, which states that as a firm increases its scale of production and need funds to buy more factors of production, it can get it from a bank at lower interest rates. This is because its larger assets and greater selling potential provides banks with greater security. And there are also less important factors such as risk bearing and managerial economies. External economies on the other hand, depend on mainly three different economies. As mentioned above, economies of concentration states that when firms in an industry are located close together, they can enjoy the pool of skilled workers and infrastructure provided by local colleges and the government respectively. Hence, through the provision of such valuable manpower and infrastructure, firms are able to attain lower average costs of production by employing these skilled workers with high productivity, or using the efficient road and communications networks to reduce transport and managerial costs.
What are internal economies?
Distinguish between internal and external economies of scale. Internal economies of scale arise when firms increase their scale of production. Hence, they incur lower average costs of production, either through specialization or other factors. When average costs fall, giving the price of the good to be constant, profit margins of these firms will be increased. Thus, the individual firm benefits from internal economies of scale. External economies of scale arise when all firms in an industry experience decreasing average costs of production, which can be due to economies of concentration, information and disintegration. Unlike internal economies of scale, external economies of scales independent on the size of the individual firms in the industry as both small and large firms benefit from it. Secondly, internal and external economies of scale depend on several factors. Internal economies of scale arise due to technical economies, which states that as a firm increases its scale of production, it is able to delegate specific jobs to its workers. Hence, through specialization in a single job, the workers are able to improve their productivity through attaining higher levels of dexterity and skill through repeated practices. Thus when productivity per worker rises, the firm is actually producing a greater amount of goods and hence, the average cost of the good falls. Of course, internal economies of scale also depend on other factors, such as marketing economies, which basically states that a firm making bulk purchases on raw materials would be able to enjoy cheaper prices, such as financial economies, which states that as a firm increases its scale of production and need funds to buy more factors of production, it can get it from a bank at lower interest rates. This is because its larger assets and greater selling potential provides banks with greater security. And there are also less important factors such as risk bearing and managerial economies. External economies on the other hand, depend on mainly three different economies. As mentioned above, economies of concentration states that when firms in an industry are located close together, they can enjoy the pool of skilled workers and infrastructure provided by local colleges and the government respectively. Hence, through the provision of such valuable manpower and infrastructure, firms are able to attain lower average costs of production by employing these skilled workers with high productivity, or using the efficient road and communications networks to reduce transport and managerial costs. Likewise, economies of disintegration and information basically states that firms together can produce enough waste or by-products to make the packaging of these products a viable option, as in the emergence of subsidiary firms in economies of disintegration, or band together and share the costs of undertaking innovation of their products in economies of information. In the former, profits earned from the sale of the by-products can be used to lower average costs of production, while in the latter, the firms need only to pay less for innovation, which prevents average costs from skyrocketing. Finally, internal economies of scale affect the firm's average cost curve by shifting the initial position to the right along the curve. From the graph, it can be seen that a firm's initial position for output is OQ1, which costs OC1 to produce. However, if the firm were to increase it's output to OQ2, costs would fall to OC2 along the LRAC curve. Thus, internal economies of scales set in. however, external economies of scale do not result in a movement along the AC curve, but a shift of the AC curve itself. Hence, AC1 will shift downwards to AC2 and the firm, although still producing at OQ1, is able to enjoy lower costs of production from OC1 to OC2 due to the advancement of the industry as a whole. Thus concluding, the first difference is the size of the firms, the second is the factors involved and the third difference is how the AC curve of the firm is affected. etween internal and external economies of scale. Regards: (USMAN PATNI)
What describes a situation which there would be decreasing marginal utility?
The Law of Diminishing Returns is one of the powerful laws in economics. The Law of Economies of Scale is another law of similar importance. [And in that order IMHO]
How did methods such vertical and horizontal consolidation and factors such as economies of scale help companies dominate their markets?
Vertical consolidation and factors such as economies of scale will help companies dominate their markets because more people will buy what a big business sells because it will cost less. Poor people will be able to buy the product because it will be cheap like a dollar instead of going to a small business's were it would cost twice as much.
What is the relationship between economies of scale and a natural monopoly?
In those extreme cases where there are extensive economies of scale across the full range of potential output for market demand, it may be most economical for only one firm to supply the entire market. In this case one firm, rather than two or more firms, would have declining average costs across the entire range of market demand and be the lowest cost producer. The single firm would be characterized as a natural monopoly.
How would you increase sales or profits for the venue?
Efficiencies. Economies of scale. Lower costs.
Which of the following would be most likely to contribute to molecules experiencing intermolecular forces?
Hydrogen bonding
What are external economies?
Internal economies of scale arise when firms increase their scale of production. Hence, they incur lower average costs of production, either through specialization or other factors. When average costs fall, giving the price of the good to be constant, profit margins of these firms will be increased. Thus, the individual firm benefits from internal economies of scale. External economies of scale arise when all firms in an industry experience decreasing average costs of production, which can be due to economies of concentration, information and disintegration. Unlike internal economies of scale, external economies of scales independent on the size of the individual firms in the industry as both small and large firms benefit from it. Secondly, internal and external economies of scale depend on several factors. Internal economies of scale arise due to technical economies, which states that as a firm increases its scale of production, it is able to delegate specific jobs to its workers. Hence, through specialization in a single job, the workers are able to improve their productivity through attaining higher levels of dexterity and skill through repeated practices. Thus when productivity per worker rises, the firm is actually producing a greater amount of goods and hence, the average cost of the good falls. Of course, internal economies of scale also depend on other factors, such as marketing economies, which basically states that a firm making bulk purchases on raw materials would be able to enjoy cheaper prices, such as financial economies, which states that as a firm increases its scale of production and need funds to buy more factors of production, it can get it from a bank at lower interest rates. This is because its larger assets and greater selling potential provides banks with greater security. And there are also less important factors such as risk bearing and managerial economies. External economies on the other hand, depend on mainly three different economies. As mentioned above, economies of concentration states that when firms in an industry are located close together, they can enjoy the pool of skilled workers and infrastructure provided by local colleges and the government respectively. Hence, through the provision of such valuable manpower and infrastructure, firms are able to attain lower average costs of production by employing these skilled workers with high productivity, or using the efficient road and communications networks to reduce transport and managerial costs.
What are internal economies?
Distinguish between internal and external economies of scale. Internal economies of scale arise when firms increase their scale of production. Hence, they incur lower average costs of production, either through specialization or other factors. When average costs fall, giving the price of the good to be constant, profit margins of these firms will be increased. Thus, the individual firm benefits from internal economies of scale. External economies of scale arise when all firms in an industry experience decreasing average costs of production, which can be due to economies of concentration, information and disintegration. Unlike internal economies of scale, external economies of scales independent on the size of the individual firms in the industry as both small and large firms benefit from it. Secondly, internal and external economies of scale depend on several factors. Internal economies of scale arise due to technical economies, which states that as a firm increases its scale of production, it is able to delegate specific jobs to its workers. Hence, through specialization in a single job, the workers are able to improve their productivity through attaining higher levels of dexterity and skill through repeated practices. Thus when productivity per worker rises, the firm is actually producing a greater amount of goods and hence, the average cost of the good falls. Of course, internal economies of scale also depend on other factors, such as marketing economies, which basically states that a firm making bulk purchases on raw materials would be able to enjoy cheaper prices, such as financial economies, which states that as a firm increases its scale of production and need funds to buy more factors of production, it can get it from a bank at lower interest rates. This is because its larger assets and greater selling potential provides banks with greater security. And there are also less important factors such as risk bearing and managerial economies. External economies on the other hand, depend on mainly three different economies. As mentioned above, economies of concentration states that when firms in an industry are located close together, they can enjoy the pool of skilled workers and infrastructure provided by local colleges and the government respectively. Hence, through the provision of such valuable manpower and infrastructure, firms are able to attain lower average costs of production by employing these skilled workers with high productivity, or using the efficient road and communications networks to reduce transport and managerial costs. Likewise, economies of disintegration and information basically states that firms together can produce enough waste or by-products to make the packaging of these products a viable option, as in the emergence of subsidiary firms in economies of disintegration, or band together and share the costs of undertaking innovation of their products in economies of information. In the former, profits earned from the sale of the by-products can be used to lower average costs of production, while in the latter, the firms need only to pay less for innovation, which prevents average costs from skyrocketing. Finally, internal economies of scale affect the firm's average cost curve by shifting the initial position to the right along the curve. From the graph, it can be seen that a firm's initial position for output is OQ1, which costs OC1 to produce. However, if the firm were to increase it's output to OQ2, costs would fall to OC2 along the LRAC curve. Thus, internal economies of scales set in. however, external economies of scale do not result in a movement along the AC curve, but a shift of the AC curve itself. Hence, AC1 will shift downwards to AC2 and the firm, although still producing at OQ1, is able to enjoy lower costs of production from OC1 to OC2 due to the advancement of the industry as a whole. Thus concluding, the first difference is the size of the firms, the second is the factors involved and the third difference is how the AC curve of the firm is affected. etween internal and external economies of scale. Regards: (USMAN PATNI)
What is Today the economies of virtually all nations would be classified as?
mixes economies
What describes a situation which there would be decreasing marginal utility?
The Law of Diminishing Returns is one of the powerful laws in economics. The Law of Economies of Scale is another law of similar importance. [And in that order IMHO]
How did methods such vertical and horizontal consolidation and factors such as economies of scale help companies dominate their markets?
Vertical consolidation and factors such as economies of scale will help companies dominate their markets because more people will buy what a big business sells because it will cost less. Poor people will be able to buy the product because it will be cheap like a dollar instead of going to a small business's were it would cost twice as much.
What are the type of economics?
There are command economies, which you would find in a dictatorship or true monarchy, free economies, which you would find in Democracies or Republics, there is the mixed economy, Which is what we have, and finally there is the traditional economy which describes tribal and agricultural economies.
What is the relationship between economies of scale and a natural monopoly?
In those extreme cases where there are extensive economies of scale across the full range of potential output for market demand, it may be most economical for only one firm to supply the entire market. In this case one firm, rather than two or more firms, would have declining average costs across the entire range of market demand and be the lowest cost producer. The single firm would be characterized as a natural monopoly.
What Economies of scale?
Reduction in cost per unit resulting from increased production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls.A:Economy of scale refers to things costing less per unit if many units are ordered. This happens for many reasons such as lower transportation costs per unit (orders come by truckloads and shiploads), tooling can be made and processes refined for larger production numbers, etc.
How would you describe natural monopolies?
When private firms gain monopoly power, usually because of economies of scale, they are in a position to restrict production and raise price with little worry of competition; these are known as natural monopolies.
What would you use to measure the weigth of a package?
You would use a scale for measuring weight.You would use a scale for this.
