Econmomies diseconomies.pptx

Unit-IV (Contd…) Economies and Diseconomies of Scale NEP -2020 Semester-1 st Economies of scale : benefits accrued from the production Expansion in production cost advantages Increase in sales Types of economies of scale Internal external Diseconomie...

Unit-IV (Contd…) Economies and Diseconomies of Scale NEP -2020 Semester-1 st Economies of scale : benefits accrued from the production Expansion in production cost advantages Increase in sales Types of economies of scale Internal external Diseconomies of scale : losses accrued Organisational Management Raw materials Types of diseconomies of scale Internal external Diseconomies of scale result in rising long run average costs which are experienced when a firm expands beyond its optimum scale, at Q.  Diseconomies of scale happen when the size of the company or firm increases so large that the cost per unit increases. Once the production crosses a particular point in production, the process of efficiency reduces. Because of this, the cost increases due to the inefficiency in production. The diseconomies of scale happen when the average cost starts to increase. The average cost is the cost of production per unit of output. It is computed by dividing the total of fixed costs and variable costs by the number of total units (fixed cost + variable cost / total output). THANK YOU