Chapter 4, Problem 1DQ

Summary Introduction

Interpretation:Economies and diseconomies of scale of college class size and its symptoms and the way these symptoms are related to customer contact are to be determined.

Concept Introduction:Economies of scale are the benefits that a firm reaps when it increases its production over a certain level. These are the benefits which a firm gets by reducing average cost and increasing output level.

Diseconomies are the disadvantages or the loses which a firm incurs when it increases output beyond a certain level. Firm incurs loses when average cost of production increases due to over production.

Explanation of Solution

As college class size increases, it means more number of students are enrolled, it results in economies of scale. Economies of scale results in usage of skills of teacher for bigger class and teacher’s pay over a bigger class.

Diseconomies of scale arise due to increase in class size. As size increases, correction of homework, regular test, updates about student’s activities, their performance, aids and scheduling accuracy goes on decreasing.

In long-run, area of class size also increases. Side effects of diseconomies of scale setting in are unfilled vacancies of educators, uninterested profile and unmotivated teachers.

In the event that nearby client contact is required for this sort of administration process, diseconomies of scale tend to set in before.

These symptoms negatively impact customer contact as increase in number of students leads to mismanagement of the data that results in losing of customer contact.