Economies of scale are the forces causing a firm?s long-run average cost to decrease as its
output level and size of the plant are increased; usually thought to be (i) increasing possibilities of
division and specialization of labor and (ii) greater possibilities of using more efficient technology,
that is, using advanced technological development and/or larger machines.
Returns to scale are the benefits that accrue to a firm from changing the proportions in which factors of
production are combined. A rational firm will always seek to maximize profits by minimizing costs: the
least-cost factor combination Returns to scale are basically concerned with the physical input and output
relationships. If, for example, the input of factors of production were to increase by 100% and output by
150%, increasing returns to scale will be realized. Conversely, if inputs were to be increased by 100% but
output increases by less than 100% then a firm would be experiencing decreasing returns to scale.
Wilfykil answered the question on February 6, 2019 at 08:57
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Write explanatory notes on the various types of internal and external economies of scale.
(Solved)
Write explanatory notes on the various types of internal and external economies of scale.
Date posted:
February 6, 2019
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Answers (1)
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What is meant by economies and dis-economies of scale?
(Solved)
What is meant by economies and dis-economies of scale?
Date posted:
February 6, 2019
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Using a well-illustrated diagram, show that a monopolist can make losses in the short-run even
when MC = MR
(Solved)
Using a well-illustrated diagram, show that a monopolist can make losses in the short-run even
when MC = MR
Date posted:
February 6, 2019
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Using a well illustrated diagram, explain why prices are "sticky" downwards under an
oligopolistic market structure
(Solved)
Using a well illustrated diagram, explain why prices are "sticky" downwards under an
oligopolistic market structure
Date posted:
February 6, 2019
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Answers (1)
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What is "Oligopoly"?
(Solved)
What is "Oligopoly"?
Date posted:
February 6, 2019
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What key assumptions underlie the law of variable proportions?
(Solved)
What key assumptions underlie the law of variable proportions?
Date posted:
February 6, 2019
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State the law of variable proportions
(Solved)
State the law of variable proportions
Date posted:
February 6, 2019
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Define the term "production function"
(Solved)
Define the term "production function"
Date posted:
February 6, 2019
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What policy recommendations would you suggest to reduce regional development
imbalances if any in developing countries?
(Solved)
What policy recommendations would you suggest to reduce regional development
imbalances if any in developing countries?
Date posted:
February 6, 2019
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Answers (1)
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State the aspects of significance of factor mobility
(Solved)
State the aspects of significance of factor mobility
Date posted:
February 6, 2019
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Explain the meaning of mobility of factors of production. To what extent are factors of
production mobile?
(Solved)
Explain the meaning of mobility of factors of production. To what extent are factors of
production mobile
Date posted:
February 6, 2019
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Answers (1)
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What are factors of production?
(Solved)
What are factors of production?
Date posted:
February 6, 2019
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The utility (U) obtained by Olympia by consuming food (F) and shelter (S) is given by utility
function U = FS
Calculate the marginal rate of substitution...
(Solved)
The utility (U) obtained by Olympia by consuming food (F) and shelter (S) is given by utility
function U = FS
Calculate the marginal rate of substitution when Olympia spends the Sh. 1,200 budget by
purchasing three units of each.
Date posted:
February 6, 2019
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Answers (1)
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If Mrs. Breader views butter and margarine as perfect substitutes, draw a set of indifference
curves that describe her preference for these two commodities
(Solved)
If Mrs. Breader views butter and margarine as perfect substitutes, draw a set of indifference
curves that describe her preference for these two commodities
Date posted:
February 6, 2019
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State the law of diminishing marginal utility
(Solved)
State the law of diminishing marginal utility
Date posted:
February 6, 2019
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Explain any four uses of indifference curve analysis
(Solved)
Explain any four uses of indifference curve analysis
Date posted:
February 6, 2019
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Briefly explain two exceptions to the definition of an indifference curve.
(Solved)
Briefly explain two exceptions to the definition of an indifference curve.
Date posted:
February 6, 2019
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Explain the main characteristics of indifference curves
(Solved)
Explain the main characteristics of indifference curves
Date posted:
February 6, 2019
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What is an indifference curve?
(Solved)
What is an indifference curve?
Date posted:
February 6, 2019
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Illustrate and explain Consumer equilibrium under the ordinalist approach
(Solved)
Illustrate and explain Consumer equilibrium under the ordinalist approach
Date posted:
February 6, 2019
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Answers (1)