Question

Please provide an example for Wal-Mart

Identify a product or service produced by the company you selected for your microeconomic/macroeconomic analysis papers. Describe the inputs used to produce this product or service as well as the types of costs involved in its production. Consider the following questions: What factors may affect the mix of inputs used to produce the product or service? To what extent does your chosen company benefit from economies of scale? What are the sources of economies of scale for your chosen company?

Answer 1

Consider cars produced by General motors. This is a majorly capital oriented industry although labour is necessary at all stages of production. The major inputs used are steel used creating the car exterior and engines for running. Skilled labour is required for assembling the parts into the car. So, it's a capital intensive industry using differentiated labour at each stage of the production process. The company benefits from economicies of scale since the fixed costs of production in the form of initial infrastructure required for car production by General motors is high. When the scale is larger, the cost per unit of output produced is lower. The high fixed costs required in the production process is the main reason for economies of scale.