Diseconomy of scale

the other organisation it is merging with is one of the main reasons why mergers fail. Mergers are normally made at the top end of hierarchies leaving middle management and lower employees in the dark making the demoted through communication diseconomies of scale. Through this process, the communication is more likely to be distorted when going down the levels of

For example, the merger of two car producers or two TV companies. There are two key motives behind horizontal integration. One is to take greater advantage of economies of scale. The new firm will be larger and hence may be able to produce at lower average cost. The other is to increase the market share. By merging with another firm producing the same product, a direct competitor is eliminated. Another possible benefit that

Economics Half-Yearly Notes PRELIMINARY TOPIC ONE: INTRODUCTION TO ECONOMICS The Nature of Economics * Economic problem: wants, resources, scarcity Relatively unlimited wants Relatively limited resources Scarcity → need for choice Economic systems: * traditional * command * market * mixed Three basic economic problems: WHAT/ HOW MUCH g + s should be produced? HOW should the g + s be produced? FOR WHOM should g + s be produced? * Economic problem: how

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

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

possibility frontier include: Linear Suppose there are constant returns to scale in both industries and only one factor, then the production possibility frontier is a straight line. If the opportunity cost is constant as production of different goods is changing, then a linear PPF is produced. Concave (towards origin) Suppose there is diseconomies of scale or decreasing returns to scale. Under full utilization of resources, the production possibility frontier is concave towards

|1. |The total product curve: | |B) |will become flatter as output increases, if there are diminishing returns to the variable input. | Use the following to answer questions 2-3: [pic] |2. |(Table: Total Product and Marginal Product) The marginal product of the second worker is: | |C) |20.

sale of goods and services on the domestic market through direct payments, tax relief for exporters. Advantages of export subsidies  infant industries Export subsidies protect small or developing countries so that they can benefit from economies of scale, as a result the production cost of infant industries will be low.  National security Domestic production of goods that are found to be harmful to the security of the nation are encouraged by export subsidies.  Domestic employment

not work for themselves 3. What are economies of scale? Please give an example. What are diseconomies of scale? Please give an example. 4. Your rich relative died and left you $100,000, which you decided to use for your own Internet business.

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