Diseconomies of scale, Describe why some firms might suffer

Diseconomies of scale

Reference no: EM1370142

An analyst in the production department for Chevrolet Caprice stated that "The marginal cost of a Caprice, given our current volume, is $12,500. Of course, the actual marginal cost depends on the number of cars produced. The larger the number produced, the lower the unit cost because we will spread out our design and tooling costs over more cars."

Economies of scale help firms to lower their production cost per unit and therefore, many firms are merged or in the process of merging. However, some large firms may suffer diseconomies of scale. Explain why some firms may suffer diseconomies of scale. Do you know any examples? Could GM be an example of diseconomies of scale?

Reference no: EM1370142

Questions Cloud

Determining productivity gains : Suppose labor costs are 17.5% of revenue per vehicle for General Motors. In union negotiations throughout the late 1990s, GM attempted to cut its workforce to increase productivity.

Determine integer to divide maximum number of partial sums : Now, given sequence, can you determine the integer M (L ≤ M ≤ U) which divides maximum number of partial sums of the sequence?

Question about surplus : During the Great Depression, federal government swung into action to help farmers. In 1933, it established a system of price support for several agricultural products.

Describe some of the problems that companies are facing : Describe some of the problems that companies are likely to face when both contingent workers and core employees work in the same location

Diseconomies of scale : Describe why some firms might suffer diseconomies of scale. Do you know any examples? Could GM be an example of diseconomies of scale?

Explain while performance evaluations part of most companies : Explain While performance evaluations are part of most organizations and unions tend to disavow their usefulness

Average total cost curve : A firm sells in a competitive market in which price is $10. Its marginal cost is 2 + .5Q. Find out the profit-maximizing level of output.

Calculate all dominant strategies and nash equilibria : Best Buy and Circuit City are competitors in the customer electronics market. Both have relatively large margins on plasma TV's. Essentially,

Explain how versatility of excel affect application support : How does versatility of Excel affect application support? As its versatility, what assumptions should be made when diagnosing and troubleshooting Excel-based problems?

User Account

All Pages