2007-09-03 03:08:26 · 5 answers · asked by Spiff 47 1 in Social Science ➔ Economics
the relationship between profit,volume and efficiency...sometimes scaling back is good,sometimes going large works...
2007-09-03 03:14:51 · answer #1 · answered by $andman 6 · 1⤊ 0⤋
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2016-12-23 21:52:09 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The more of a given product you make usually, the cheaper it can be made.
Think of a tract of new homes. If the carpenters go from one house to the next they work full time putting up houses. Only the drive time between their house each day and the job site take away from the job. A single house would require driving trips between houses, the time to load up tools and supplies etc. In addition if you were to buy lumber for 40 homes at one time and have it delivered to just one location you would pay less to the supplier. Its like buying the giant size in the grocery, the bigger it is the lower cost per unit.
Sales of those homes would also be cheaper since your agent could spend full time at the site and not need to transport and meet customers all over the city.
2007-09-03 04:27:25 · answer #3 · answered by paul 7 · 1⤊ 0⤋
A decrease in the per-unit average cost of a product over time. In other words, as a company increases the scale of its output, it is able to produce each unit of its product at a lower cost.
At some point, this increase in scale will reach its peak, and then each additional unit produced will cost the company more on average to make. This is when the company enters into "diseconomies of scale".
2007-09-03 06:50:01 · answer #4 · answered by InvisibleHand 3 · 0⤊ 0⤋
It means your ATC curve is downward sloping.
2007-09-03 15:15:22 · answer #5 · answered by Anonymous · 0⤊ 0⤋