Returns to scale in carpet industry, Microeconomics

Returns to Scale in Carpet Industry

*  The carpet industry has grown from the small industry to large industry with some large firms.

*  Question

- Can the growth be illustrated by the presence of economies to scale?

369_us carpet industry.png

*  Are there economies of scale?

- Costs (or percent of cost)

  • Capital - 77 percent
  • Labor - 23percent

*  Large Manufacturers

- Increased in machinery and labor

- Doubling inputs has doubled output

- Economies of scale are there for large producers

*  Small Manufacturers

- Small increases in scale have no impact on output

- Proportional increases in inputs proportionally increase output
- Constant returns to scale for the small producers 

Posted Date: 10/12/2012 2:00:10 AM | Location : United States







Related Discussions:- Returns to scale in carpet industry, Assignment Help, Ask Question on Returns to scale in carpet industry, Get Answer, Expert's Help, Returns to scale in carpet industry Discussions

Write discussion on Returns to scale in carpet industry
Your posts are moderated
Related Questions
1. What is simultaneous biases? Discuss the cause of ednoginity in regression analysis. 2. Explains concisely what is meant by ' the identification problem'' in the context of l

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

How to use Demand and Supply tools to analyze the case of the Egyptian labor market?

An economics branch which keep concentrate on illumination the economic decisions people make in practice, particularly when these conflict with what conventional economic theory p

The reason that an entrepreneur supposes the risk of starting a business is to earn profits.  The fundamental assumption in the theory of production is that a rational owner of a b

what to produce? how to produce? for whom to produce

Exit Strategy The exit strategy denotes that which investors in an organizations realize all or elements of their investment, regardless of the organizations success.


With the recession, average incomes have fallen from $44,375 to $41,720.  Before the recession Groucho's Gizmos sold 600 gizmos a month. As an economics, predict the number of gizm

What is Expenditure Function? The Expenditure Function: When preferences satisfy the local nonsatiation assumption, in that case v(p, m) will be strictly increasing into m.