production Flashcards
internal economies of scale
obtaining capital at a lower cost eg borrow from a bank at a lower interest rate as they have more collaterals
a wider scope of specialization can raise efficiency and reduce the average cost
when the output is larger, machines can be utilized more fully and efficiently and reduce the average cost
buying raw materials in bulk helps to obtain discount in the purchase and result in a decrease in average cost
spreading research expenses over a larger output can reduce the average cost
with more and varied product, it can spread risk by diversification of market of the raw materials
external economies of scale
lower transportation cost as transportation network and other infrastructures would develop more quickly thus improving accessibility
lower average cost of recruiting high educated labor as they are attracted to there
Reduction of marketing and promotion costs as the region would attract more buyers
more related business available(lower sourcing cost)
why helpers are paid by time rate
cost of measuring the output of helpers is too high
work of helpers is not standardised
advantage of time rate in the perspective of the employer
cost of wage calculation is lower
easier to maintain a static team of staff
How transport subsidy promote sustained employment
if the transport subsidy continues to subsidize the workers on travelling expenses
-ve:
as employment largely depends on the AD and AS of the economy which may fluctuate over time.
whether instagrams video are public good or not
yes it is public good
It is because the videos are non-rival in consumption as people can concurrently watch the video without affecting one another.
how high speed rail will affect geographical mobility
it will increase as the transportation network increases.
how improving production technology will lead to a higher average labour productivity
Labour productivity would rise as improved technology or higher quality of capital goods would result in an increase in output per unit labour
internal diseconomies of scale
The firm may have become too large in scale, so managerial efficiency starts declining
The firm may have large outstanding loans, so the marginal cost of further borrowing increases
The market may have saturated leading to a rise in the marketing cost
advantage of basic salary plus commision
lower cost of supervision
share some business risk to the employee
why football player has low occupational mobility
their skills are specific and not easily transferable to other jobs
why division of labour can reduce average cost of production
it will lead to a large scale production and bring forth to economies of scale
Define average labour productivity
output per man hour
whether someone runs a firm
if yes
A firm is a production unit
provide services
make decisions and bear risk in this production unit
will the increase in number of retired workers increase the average labour productivity
not necessary
it only directly affect the labour supply
