Copyright: Peter B. Grubenmann Why do People or Nations Trade Countries engage in international trade for two basic reasons: – They are different from each other in terms of climate‚ land‚ capital‚ labor‚ and technology. – They try to achieve scale economies in production. The Ricardian model‚ developed by English Economist David Ricardo (1772 – 1832)‚ tries to explain why Nations trade. Copyright: Peter B. Grubenmann Why do People or Nations Trade Ricardo’s theory is based on technological
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tailor-made C) off-the-shelf with adaptation D) made-to-order Answer: A Page Ref: 235 Difficulty: Easy AACSB: Use of IT Study Question: Study Question 1 5) The bigger the system and the longer the project‚ ________. A) the lesser are the diseconomies of scale B) the more the requirements change C) the greater is the average contribution per worker D) the easier the task of scheduling becomes Answer: B Page Ref: 236-237 Difficulty: Moderate AACSB: Use of IT Study Question: Study Question 2 6)
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Role of consumers: - consumers: all individ.s in ec. that consume goods and services to satisfy needs and wants - consumer sovereignty: refers to the fact that patterns of consumers spending determine patterns of production. Through spending dec. consumers express their preferences. Factors influencing individual consumer choice: Income: disposable income – after tax (main determinant on consumer spending) More income‚ more demand for good and services But APS
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total cost minimized? At what point is average variable cost minimized? Chapter 6 Technical Question 3 Industry studies often suggest that firms may have long-run average cost curves that show some output range over which there are economics of scale and a wide range of output over which long-run average cost is constant;
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predatory pricing and force rivals out of business‚ this will reduce competition even further. Also‚ if firms get too big they may suffer from diseconomies of scale which leads to higher average costs. However‚ an increase in the concentration ratio is not necessarily a bad thing. Firstly‚ if firms increase in size they may be able to benefit from economies of scale‚ causing lower average costs. This is likely to occur in industries with high fixed costs and scope for specialization. Another effect from
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factor ratings and location ratings? How are these useful in facility location planning? 11. What is meant by the capacity of a facility? In what ways can the capacity of a facility be measured? 12. Define the terms “economies of scale”‚ “diseconomies of scale” and “economies of scope”? 13. Bring out the comparison between product layout and process layout. 14. What is economic order quantity (EOQ)? Explain the EOQ model of inventory with its simplifying assumptions? 15. Discuss the
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cost rose from $225‚000 to $250‚000 when output increased from 4 to 5‚ the marginal cost of the fifth car is $25‚000. The marginal-cost curve and the average-total-cost curve for a typical firm are shown in Figure 3. They cross at the efficient scale because at low levels of output‚ marginal cost is below average total cost‚ so average total cost is falling. But after the two curves cross‚ marginal cost rises above average total cost‚ and average total cost starts to rise. So the point of intersection
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Chapter 8 Costs and the Supply of Goods Questions 1 through 10 are a Suggested Chapter Quiz. 1. Which of the following is most likely to be an implicit cost of production? a. property taxes on a building owned by the firm b. transportation costs paid to a trucking supplier c. rental payments for a building utilized by the company and rented from another party d. interest income foregone on funds invested in the firm by the owners 2. Which of the following explains most clearly why business
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As part of the management team at PPQ Parts‚ I have been charged with selecting the best software packages for several of the firm ’s needs. These needs include materials requirement planning (MRP)‚ capacity requirement planning (CRP)‚ and enterprise resource planning (ERP). Before we can choose among the various software programs‚ we need to first identify the needs as listed above. We can begin with MRP. This is basically a planning system for production that is used for planning new projects
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Training time needed to bring workers to efficient status‚ along with their experience. Salary costs are up front and prior to full efficiency point. e How would expanding the business affect the economies of scale? When would you have constant returns to scale or diseconomies of scale? Describe your answer. As far as number of workers‚ the range between 2-5 workers provides fairly consistent production numbers‚ and you can reasonably assume that profit per pizza is equal or more up to the level
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