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29-12-2015 07:00:00 +0000
Who can define this term "external diseconomies of scale"?
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External diseconomies are not suffered by a
single firm but by the firms operating in a
given industry. These diseconomies arise
due to much concentration and localization
of industries beyond a certain stage.
Localization leads to increased demand for
transport and, therefore, transport costs
rise. Similarly, as the industry expands,
there is competition among firms for the
factors of production and the raw-materials.
This raises the prices of raw-materials and
other factors of production. As a result of all
these factors, external diseconomies become
29-12-2015 07:03:00 +0000
@prosper good one.
Anyone else have a definition? There are many possible correct answers
29-12-2015 07:55:00 +0000
29-12-2015 08:16:00 +0000
External diseconomies of scale!!! Wow love how it sounds
29-12-2015 08:28:00 +0000
external diseconomies of scale are factors outside a company's control that will increase its cost because of the size of the companys operations. for example, as a business grows,it may put pressure on its suppliers,raising the price of parts and raw materials
29-12-2015 09:32:00 +0000
Here is our explanation on the topic of economies of scale.
To properly define this term we first have to know what 'economies of scale' are.
Economies of scale are the cost advantages (efficiencies) that a companies gains just because it is larger than others in the same industry.
For example one could compare the revenue and labor costs of a small shop having 2 employees (a madam and her son) with a supermarket having 10 employees.
Assuming they pay their staff the same amount, the labor costs of the supermarket is 5 times that of the shop.
If there was no economies of scale (i.e. cost advantage) to having a larger company, then we would expect the supermarket will do exactly 5 times the amount of revenue as the shop.
If there are economies of scale to having a larger company, then we would expect the supermarket to be bringing in 6, 8, 10 or even 100 times the amount of revenue as the shop.
If there are diseconomies of scale to having a larger companies, then we would expect the supermarket to bring in less than 5 times the amount of revenue that the small shop generates.
This brings us to the word 'external'. In this context, external refers to factors outside of the companies control that affect economies of scale. An example of an external diseconomy of scale is if the government changed the law and said that any company with more than 2 employees will pay double the tax rate.
Internal refers to factors that the company can control.
A special thanks to @prosper and @gabriel for their contributions!
30-12-2015 06:37:00 +0000
Golden the boss Umesiri
Wow now I understand it better
05-01-2016 16:43:00 +0000
who can tell me what determine tax boarding
07-01-2016 18:14:00 +0000
We're not sure what you mean by 'tax boarding' what is that in relation to?
07-01-2016 19:01:00 +0000
micro economies can also B called theory of price and small economies.
08-01-2016 13:51:00 +0000