ECO 1013: CLASS REFLECTION WEEK 9

Assalamualaikum semuaa 

Cuti ni balik yeay yeay

In week 9, kita habiskan chapter 3 yeay !

COST OF PRODUCTION

1. Types of cost production 

2. Economies of scale 

Internal of economies of scale

Labour economy  specializing of labour can help increasing the efficiency of labour and cut the cost of production. 

Managerial economies every department is under the employment of professionals. It will increase the efficiency and cut cost

Marketing economy  large firm can buy product in bulk at a cheap price, This cuts cost of production. Small firm cannot obtain this benefit.

Technical economies technology can improve production process. This is where the firm uses the capital (machines) in maximum usage.

Financial economy  the ability for firm to obtain funds or loan from others

Risk bearing economy the willingness for the firm to bear the risks in the business

External of economies of scale 

Economies of government action  firm grab the opportunity from governments actions. Example: subsidies

Economies of concentration  based on the location. Firm look for high concentration of customers in the area. This includes transportation and communication from the shop to customers

Transportation  transportation can cut cost because it can help develop more in distant places. 

3. Diseconomies of scale

Management problem  lack of coordination can increase the cost which cause firm to get more complex 

Worker problem  poor motivational from worker leads to shoddy work. 

Thanks for reading !

 P/S : Extra video on cost of production