Economies of Scale in Production - AirBorn Electronics

Read the design steps to review the basic production process of a new electronic circuit board. Click on "see Economies of Scale" under the "Production" section. Study the "Economies of scale in Electronics Production."

• Why is the cost of final production heavily influenced by the number of units manufactured?
• Explain why the PC (personal computer) industry typifies the economies of scale rule.
• Review the production costs and revenue associated with producing Ginseng in Ontario, Canada at the Ontario Ministry of Agriculture, Food, and Rural Affairs. Which cost categories (e.g. preparation, annual cash costs, harvest, etc.) are variable in nature?
  

Economies of Scale on Dairy Farms

Read Timothy J. Richards' article on "Positioning Your Dairy Farm Business for a Profitable Future - A Western Canadian Perspective".
a. Use Table 1 to compute an average fixed cost schedule.
b. Use Table 1 to compute a marginal cost schedule.
c. List the major reasons for the existence of economies of scale in dairy farms.
d. How has the development of automated milking equipment affected the shape of the long-run average cost curve? Is it likely that this innovation has raised the minimum efficient scale in this industry? Explain.

Economies of Scope

Visit the web site of Electrified Discounters.
a. List the types of products offered for sale by this firm.
b. Explain why economies of scope may exist when such a mix of products are offered by a single firm.
c. Could similar arguments be used to explain the existence of supermarkets that provide a wide variety of consumer products? Explain.

Legal Information and the WWW

Read Thomas R. Bruce's "Choreography for a Dancing Bear: The Web, Markets, and Strategies."
a. According to Bruce, what has the development of the World Wide Web done to affect economies of scale in the provision of legal information?
b. As a result of the World Wide Web, what has happened to the minimum efficient scale of providing information services?