Returns to scale in carpet industry, Microeconomics

Assignment Help:

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 


Related Discussions:- Returns to scale in carpet industry

Price elasticity of demand , Describe what the price elasticity of demand i...

Describe what the price elasticity of demand is and why it is of interest in examining markets.  Might it be beneficial in the airline industry?  Why?

Schools and subsidies, Use two market diagrams to explain how an increase i...

Use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges.

ENVIRONMENTAL POLLUTION TYPES, Pollutant Any substance, species produc...

Pollutant Any substance, species produced either by a natural source or by human activity, which produces very adverse effect on the environment is called pollutant. Some commo

Production cost, how can draw the table and diagram of production function ...

how can draw the table and diagram of production function function with one veriable

Production and cost and market structures, In the long-run equilibrium, eac...

In the long-run equilibrium, each firm in a perfectly competitive industry will choose the plant size associated with minimum long-run average cost. Is this TRUE or FALSE? And why?

Compensated demand curve, Compensated Demand Curve: Compensated demand...

Compensated Demand Curve: Compensated demand function for a commodity (say x1) of an individual consumer represents demand quantity for that good (which is purchased by the co

Calculate the required reserve ratio, 1. Calculate the required reserve rat...

1. Calculate the required reserve ratio. 2. Assume that Pam wants to borrow money to pay for a new car from Sharpeland Bank. a. What is the maximum amount that Sharpeland Ban

Graded discussion board, The Case: In Pakistan, sugarcane, wheat, rice and ...

The Case: In Pakistan, sugarcane, wheat, rice and cotton accounted for 90% of the value added in crops and 6% of GDP in the last fiscal year but the average yield of these crops is

Parallel economy, PARALLEL ECONOMY: What is in popular parlance known ...

PARALLEL ECONOMY: What is in popular parlance known as black money, and is, misleadingly called the 'parallel' economy, (as it operates very much with and within the legal, fo

Production theory, why does gap between the ATC curve and the AVC curve dec...

why does gap between the ATC curve and the AVC curve decreases as the level of output increases

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd