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Questions tagged [economies-of-scale]

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7
votes
3answers
703 views

Can a monopoly INCREASE the market surplus compared with a competitive market?

Monopolies are often blamed for DWLs(Dead Weight Losses), while competitive markets believed to work without DWLs (assuming zero taxes/subsidies and zero externalities). But I think I found an ...
5
votes
2answers
190 views

Why doesn't economy of scale bring down prices of food?

I have little to no experience in economics and would enjoy a simple answer, if possible. Additionally, I base this question on subjective data, so I might be completely wrong in my assumptions. EDIT:...
4
votes
1answer
91 views

Economies of scale v.s. technological change

In Greene's Econometric Analysis, 7th edition, page 355, it is written that: A long-standing problem in the analysis of production functions has been the inability to separate economies of scale ...
3
votes
1answer
4k views

Economies of Scale vs Learning Curve

Is there a difference between the meanings of the terms "economies of scale" and "learning curve"? The term "learning curve" is being used by cost estimators and refers (more or less) to the idea ...
2
votes
2answers
391 views

Returns to scale - Constant Function

Suppose we have a production function $f(z)=2$. I am asked to determine whether the function exhibits increasing, decreasing, constant or no returns to scale. For $t>0$, $f(tz)=2$. I'm not sure ...
2
votes
1answer
1k views

Decreasing Costs, Increasing Returns to Scale, & C''(q)

Given a profit-maximizing firm with production function $f(x_1,x_2)$, I understand that we can formulate a firm's cost function $C(q)$ by using the contingent demand functions $x_1^c$ and $x_2^c$. We ...
2
votes
0answers
85 views

Economies of scale in Robinson Crusoe economy?

I encountered the following question: Which of the following will NOT exist in a one-man economy? 1. competition 2. private property rights 3. economies of scale Turns out the answer was 1 and 2. I ...
1
vote
1answer
985 views

Diminishing returns and economies of scale

I was wondering whether these are contrary as one effectively says production becomes cheaper as production increases. To increase production you may need to upgrade from a standard machine to high ...
1
vote
1answer
69 views

finding the returns to scale of a production function

Find the returns to scale for he following production function- $(x_1 + 1)^.5 (x_2)^.5$ My attempt, Let $f(x_1,x_2)=(x_1 + 1)^.5 (x_2)^.5$ And $g(x_1,x_2)=(x_1)^.5 (x_2)^.5$ Now, $(x_1 + 1)^.5 (x_2)^....
1
vote
2answers
43 views

Why do banks offer less interest on larger deposits?

This may be a UK only thing but... I have noticed that it is very common to see current accounts that offer some interest on the first couple of thousand pounds deposited with them and then less ...
1
vote
2answers
93 views

Economies of scale: when is it disadvantageous?

So, I watched a video on economies of scale. It makes sense to me but I'm wondering, is there a point where say doubling the production rate makes the product even more expensive? How can I figure out ...
1
vote
0answers
150 views

Relationship Input Distance Function and Output Distance Function

I was wondering if anybody knows how input distance functions (IDF) and output distance functions (ODF) relate to each other. One of the advantages of distance functions over cost and revenue ...
1
vote
0answers
143 views

Returns to scale and specialization

Anyone care to explain how exactly decreasing returns to scale (DRS) can lead to specialization? Having come across a few studies showing how large farm enterprises tend to experience DRS, I came to ...
1
vote
2answers
65 views

Is there any empirical evidence for the so-called “law” of diminishing returns

The "law" of diminishing returns is usually "demonstrated" with made-up examples (programmers working on a software, farmers acquiring land...), but rarely on evidence. Is there any empirical research ...
1
vote
1answer
140 views

Do you get economies of scope from horizontal or vertical integration?

Economies of scope: make it cheaper to produce a range of products together than produce each one on its own as company can share inputs (e.g marketing and finance) removing cost redundancy Would ...
-2
votes
1answer
487 views

Does this table show constant returns to scale? [closed]

The following table, which is part of a wider question, apparently shows constant returns to scale. My calculations do not seem to show that constant returns to scale occurs. The correct answer is B. ...