Thursday, 16 April 2009

SomethingSomething~(daily)


Economy of scale(I found it in the revision manual which i always forgot):
Economies of scale is a long run concept and refers to reductions in unit cost as the size of a facility, or scale, increases which is illustrated on the diagram above.Diseconomies of scale are the opposite. Economies of scale may be utilized by any size firm expanding its scale of operation. The common ones are purchasing, managerial (increasing the specialization of managers), financial (obtaining lower-interest charges when borrowing from banks and having access to a greater range of financial instruments), and marketing (spreading the cost of advertising over a greater range of output in media markets). Each of these factors reduces the long run average costs (LRAC) of production by shifting the short-run average total cost (SRATC) curve down and to the right.
It's always a purpose of firms investment with technical advances. Besides,when we consider the importance of investment,we should think about 3c-capacity,costs,competitiveness.

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