ECON616phase3DB Economies and Diseconomies of Scale - Phase...

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Phase 3 Discussion Board: Efficiency & Cost of Production Colorado Technical University Online ECON616-1403B-01: Applied Managerial Economics Professor: Gladys Nwabah September 03, 2014 I. Introduction With the Board discussing each aspect regarding decisions to be made at AutoEdge, Mr. Scholl has asked me to provide some information regarding efficiency. Efficiency is achieved by successfully reaching economies of scale, until diseconomies of scale occur. We will discuss both of these subjects further as well as how we will know when AutoEdge has attained economies and diseconomies of scale. I will also provide recommendations as to how AutoEdge can achieve efficiency and economies of scale to sustain our growth and success. (Colorado Technical University Online, 2014) II. Efficiency Efficiency is denoted as a financial stage where a company cannot manufacture a further quantity of products without having to decrease another goods amount of manufacture. This means that a business is producing within its’ manufacturing capability boundaries. Efficiency in manufacturing is realized when a good is made at its lowermost average whole cost. Manufacturing efficiency determines if a firm is making products at their full potential without squandering valuable resources. Due to resources being restricted, manufacturing goods effectively permits greater production. If the firm can no longer produce more of a product
without forfeiting the making of an alternative, supreme manufacturing has been realized. (Keat, 2013) III. Economies of Scale Economies of scale are related to the expense benefit that occurs when production of a good is raised. In other words, the more products that are manufactured, the lower the per-unit expense

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