Since economies of scale exist, why do long-run marginal costs increase, ultimately, as output increases?
(in about 600-800 words giving references)
Sometimes, organizations runs after economies of scale for so long that after a particular point, the marginal costs starts to increase as the output increases. This is called diseconomies of scale. This happens when the business grows very large. At this point, economies of scale stops and the reducing costs stop too. This can happen due to many reasons. Mismanagement of human capital is one of them.
It especially occurs when there is operational efficiency in the organization. When there are so many workers for a limited number of machines and or greater number of machines for limited workforce. This lead to lack of coordination and efficiency. This is a point when the firm has actually realized all the cost reducing benefits.
Consider the following diagram. Costs are measured on y axis and output is measured on x axis. Q* is optimum quantity produced. Economies of scale and diseconomies of scale are shown in the diagram. There are these phases which describe the whole phenomenon.
In such a situation, the communication between employees becomes vague and unclear. It happens between most of the individuals, sections or the departments of the organization. One important factor that can lead to diseconomies of scale is the lack of incentive for the worker to produce effectively. Generally firms are bigger n size and the workers have the mindset of rich organization. They think that nothing will happen if they skip the work. This leads to the fall in productivity.
Another reason could be increase in management costs of the administration. As firms grows bigger and further bigger, they have maintain more records, employ more worker, purchase more machinery. These all things collectively lead to the lower efficiency and increasing per unit costs.
So, these were the factors that happen to create diseconomies of scale. It has been experienced by major institutions also. To tackle such a problem, the firms have to realize it and make changes in the production process.
Since economies of scale exist, why do long-run marginal costs increase, ultimately, as output increases? (in about 600-...
What are economies of scale and why are such economies available only in the long run? (in about 600-800 words giving references) Since economies of scale exist, why do long-run marginal costs increase, ultimately, as output increases? (in about 600-800 words giving references)
Economies of scale occur when: Select one: a. the long-run average cost rises as output increases. b. the marginal cost falls as output increases. c. average fixed costs are constant. d. the long-run average cost falls as output increases
An increase in long-run average costs resulting from increases in output is __________. Question 18 options: attributed to constant returns to scale attributed to diseconomies of scale attributed to the law of diminishing marginal product attributed to economies of scale
13. As output (plant size) increases, economies of scale occur when the A) long-run average cost increases. B) long-run average cost decreases. C) short-run average total cost decreases. D) long-run average cost stays constant 14. Economies of scale can occur as a result of which of the following? A) increasing marginal costs as the firm increases its size B) higher fixed cost as the firm increases its size C) management difficulties as the firm increases its size D) greater specialization...
Economies of scale are when long-run costs are falling, so do day-to-day costs (like labor) really have an effect on the long run since they are always paid in the short run? Why or why not?
Economies of scale occur when Select one: a. long-run average total costs rise as output increases. b. long-run average total costs fall as output increases. c. long-run average total costs are constant. NumberofWorkers Output FixedCost VariableCost TotalCost 0 0 $50 $0 1 90 $50 $20 $70 2 170 $50 $40 3 230 $50 $60 $110 4 240 $80 $130 Refer to Table 13-3. If the firm produces an output of 170 units, what is the total cost? Select one: a....
3.) As output increases, why do marginal cost and average cost eventually increase, in both the short run and long run.
3.) As output increases, why do marginal cost and average cost eventually increase, in both the short run and long run. pls make a comparison on short run and long run.
Question 10 2 pts Economies of scale exist when: opportunity costs go to zero the average total costs decrease as output increases the average total costs increase as output increases average fixed cost increase as output increases
__B__ 48. Economies of scale a. require inputs' MPP to fall as output increases (everything else equal). b. pertain to the long run only. c. refer to increased output generalized by an increase in the quantity of a single input. d. imply that the AC curve will fall continuously as output increases in the short run. __D__ 49. If in some production range average cost is rising, the firm is experiencing a. increasing returns to scale. b. decreasing returns to...