A cluster of independent small-scale footwear manufacturers operating in an industrial estate experience reduced operational expenses following the establishment of a state-funded leather research center and shared technical training facility in their municipality. Prompted by rising product demand, one manufacturer doubles their factory size and workforce, but soon encounters an increase in average unit production costs caused by administrative delays, poor inter-departmental communication, and managerial inefficiency within the enterprise. Which economic concepts correctly identify the cost reduction experienced by all firms in the area and the cost increase suffered by the expanding enterprise, respectively?
- External economies of scale and internal diseconomies of scaleCevap
- BInternal economies of scale and external diseconomies of scale
- CBenefits of specialization and worker monotony disadvantages
- DIndirect production efficiencies and direct production losses
Cevap
The initial cost reduction enjoyed by all localized firms reflects external economies of scale, while the subsequent average unit cost increase due to internal management problems within the expanded firm reflects internal diseconomies of scale.
The correct answer accurately distinguishes between external and internal factors affecting production costs. Industry-wide cost benefits resulting from localized government infrastructure or shared services constitute external economies of scale. In contrast, cost increases arising from management breakdowns and administrative complexities following internal firm growth are classic examples of internal diseconomies of scale.
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Anahtar Kavram
Scales of Production: Internal vs. External Economies and Diseconomies of Scale