Efficiency and Cost of Production

User Generated

YnOryynZr

Economics

Description

Primary Task Response: Within the Discussion Board area, write 600–800 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas:

Additional Information: Because the decision about relocating manufacturing operations to the United States is so important, the board of directors at AutoEdge continues to systematically discuss every aspect of the situation.

The following week, CEO Lester Scholl meets you for coffee to discuss next week's board meeting.

"I'm hearing good things about you," he says. "Ingrid and George tell me you've been very responsive and helpful."

"That's good to hear," you say. "I've enjoyed working with them."

"We're both busy, so I'll get right to the point," he says. "One of the main objectives of any business is to be efficient. Without efficiency, the company is essentially losing money. Am I right?"

"Absolutely," you say.

"What must AutoEdge do," he says, "to obtain economies of scale with production? How do we know that it has achieved economies of scale? Conversely, how do we know if it is achieving diseconomies of scale?"

"That's a good question," you say. "I can understand why you ask."

But before you can respond, Lester's cell phone rings. After a minute, he ends the call and stands.

"I have to get back to the office to handle an emergency," he says. "Would you send me an e-mail with an answer to my questions, please?"

"No problem," you say. "I'll get it to you before I leave work this afternoon."

"I appreciate it," he says. "Thanks."

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Explanation & Answer

Attached.

Running Head: ACHIEVING ECONOMIES OF SCALE

Achieving Economies of Scale
Name
Institutional Affiliation

1

ACHIEVING ECONOMIES OF SCALE

2

Dear Mr. Scholl, having pondered over the questions you put to me I have come up with
a few suggestions I think may be beneficial to achieving economies of scale. With the intended
movement of our manufacturing operations to the United States shows that we are a large
company. It is true what you said over coffee that any business has to be efficient to save on
costs and to achieve the desired economies of scale efficiency has to be a priority. As economies
of scale are the costs saved as a result of manufacturing more of a product to achieve it we have
to increase our level of output. To increase production the process has to be efficient ensuring we
do not incur costs of production. To do this the company has to invest in the new mach...


Anonymous
Great study resource, helped me a lot.

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