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    You Just Happen To Mention These iEOS, You Can Mention The Counter To Give You Evaluation Marks Etc) : Monotonous Work. Might Lead To Mistakes On The Part of Worker and

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    Rishabh
    The document discusses the long run average cost (LRAC) curve and how it relates to economies of scale. It defines minimum efficient scale (MES) as the lowest point on the LRAC curve, where average costs are minimized due to large-scale production advantages. Internal economies of scale (iEOS) are cost savings that result from a firm's own actions like specialization and division of labor or use of large-scale indivisible machinery. As output increases, average costs first fall but then rise beyond the optimal size due to internal diseconomies of scale.

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    You Just Happen To Mention These iEOS, You Can Mention The Counter To Give You Evaluation Marks Etc) : Monotonous Work. Might Lead To Mistakes On The Part of Worker and

    Uploaded by

    Rishabh
    43 views1 page
    The document discusses the long run average cost (LRAC) curve and how it relates to economies of scale. It defines minimum efficient scale (MES) as the lowest point on the LRAC curve, where average costs are minimized due to large-scale production advantages. Internal economies of scale (iEOS) are cost savings that result from a firm's own actions like specialization and division of labor or use of large-scale indivisible machinery. As output increases, average costs first fall but then rise beyond the optimal size due to internal diseconomies of scale.

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    eos

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    Eos

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    The document discusses the long run average cost (LRAC) curve and how it relates to economies of scale. It defines minimum efficient scale (MES) as the lowest point on the LRAC curve, where average costs are minimized due to large-scale production advantages. Internal economies of scale (iEOS) are cost savings that result from a firm's own actions like specialization and division of labor or use of large-scale indivisible machinery. As output increases, average costs first fall but then rise beyond the optimal size due to internal diseconomies of scale.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    43 views1 page

    You Just Happen To Mention These iEOS, You Can Mention The Counter To Give You Evaluation Marks Etc) : Monotonous Work. Might Lead To Mistakes On The Part of Worker and

    Uploaded by

    Rishabh
    The document discusses the long run average cost (LRAC) curve and how it relates to economies of scale. It defines minimum efficient scale (MES) as the lowest point on the LRAC curve, where average costs are minimized due to large-scale production advantages. Internal economies of scale (iEOS) are cost savings that result from a firm's own actions like specialization and division of labor or use of large-scale indivisible machinery. As output increases, average costs first fall but then rise beyond the optimal size due to internal diseconomies of scale.

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    © All Rights Reserved
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    of 1

    Desirability give firms view, consumers view, and societys view. See remedial exercise 2.

    Def: LR: time period where all factors of production can be varied, except level of technology.

    Long run average cost curve shows how average cost varies with output. (u shaped with axis: cost
    and quantity. Label MES and do a doted divider and label iEOS and IDEOS). As output rises, at first
    average costs fall because of large scale pdn advantages. The rising part of the lrac curve reflects
    average costs increasing due to internal diseconomies of scale (happens when firm expands beyond
    optimum size).

    Minimum efficient scale: Achieved when long run average cost is minimum (lowest point on lrac). It
    is the optimal plant size or output level beyond which no additional economies of scale can be
    achieved.

    Def: economies of scale are cost or industry expansion).

    Def: iEOS are the savings in as a result of firms expansion, and have been created by the firms own
    policies and actions.

    Types of iEOS

    Technical Economies

    - Specialisation and division of labour

    As the firm increases in size, it becomes possible to employ the principle of division of labour
    to an increasing extent. Thus, the larger the scale of production is, the greater the scope of
    specialization of both labour and machinery. By performing the same actions repeatedly, a
    worker becomes very skilled and can perform with speed and dexterity. If production is
    broken down into many different stages, machine can be designed specifically for each
    stage.

    Example: This process is clearly seen in a modern car assembly plant, where many of the
    different stages in assembly are completed by computer-controlled machines. Hence, such
    mass production techniques have helped to cut down unit costs of production.

    Counter (for essays where you are asked the advantages of being a large firm. Even when
    you just happen to mention these iEOS, you can mention the counter to give you
    evaluation marks etc): Monotonous work. Might lead to mistakes on the part of worker and
    lower productivity so AC increases.

    - Indivisibility of Machinery (large scale machinery)

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