For other industries, it is possible to attain economies of scale when the increased volume enables the assignment of resources more efficiently. This is particularly true of costs associated with manpower specialisation, where an increase in volume allows for individuals to be assigned specialised tasks, thus streamlining production methods. This results in improving rate of production without increasing the number of workers. Thus, increasing economies of scale occurs when the marginal increase in a factor of production is less than the marginal increase in the corresponding quantity of products produced.
Economies of scope is similar to economies of scale because it aims to increase production faster than the attendant increase in costs. The difference lies in the number of products by which to attain this. Economies of scope seeks to reduce per unit total cost by diversifying the products a firm makes and sells. By increasing the number of product lines and extending the use of inputs (manpower and machinery) over the alternative products, the overall cost per unit of each product line is reduced because of the sharing of fixed costs among the product lines. For instance, Dunkin Donuts’ main product line is its number of variously flavoured donuts; somewhere along the line the firm decided to produce Munchkins, the bite-sized versions of the same flavours as the donuts, they tapped a new type of market demand which preferred the smaller versions. From the production aspect, the same machines and manpower were used to make the new product, thus spreading fixed costs over two product lines. Thus, increasing economies of scope occurs when the sum of the marginal increases in the cost of producing one additional unit in all the product lines is less than the increase in the marginal cost of each product line taken
In this sense, economies of scale result when fixed costs are spread over more and more units of production, resulting in a lower total cost per unit. To…
It will be interesting to see the recent history of gasoline prices in the state of California. Picking 6 year price chart of gasoline along with price movement of crude oil which is a basic raw material for producing gasoline, some interesting observations can be made.
Basically, even the ordinary people when thinking of payment people tend to worry so much. Money talk is really a very complex topic. There are so many things that you have to consider. There are lots of conditions that need to face. Balance of payment is a wide varying area that needs to discuss especially by the government.
The author states that the most appropriate way that a business can implement the management of quality costs is through the art of avoiding a situation whereby defects are allowed to thrive in any possible department in the firm or organization. It is advisable to do prevention of problems before they occur rather than to wait till they occur.
Among these sources of competitive advantage through cost leadership, the most valuable are the last three - experience, cheap inputs, and better technology -that in most cases are rare and costly and, therefore, difficult to imitate.
The company must be properly organized to fully benefit from these competitive advantages.
The body of the paper expounds three microeconomics concept namely average total cost, marginal cost, and marginal product.
It is irrefutable that the goal of a firm is profit maximization (Brue and McConnel 2005). Economically speaking, all business organizations would want to maximize the use of its resources in order to make the maximum return possible given its limited resources (Brue and McConnel 2005).
Inventories take a greater component in the statement of financial position hence deemed fundamental in the financial perspective. Manufacturing a suitable quality and quantity at the appropriate time that satisfies customer needs is a fitting inventory production. Satisfying customer needs is achieved by meticulously designing products.
In contrast, Najib defines world cinema as a global cinema that is not centered in Hollywood, the West or any other part of the globe. She further stresses that world cinema addresses distinct movements in cinema and makes geographical
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