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Economies Of Scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in unit cost, cost per unit of output enables an increase in scale that is, increased production with lowered cost. At the basis of economies of scale, there may be technical, statistical, organizational or related factors to the degree of Market (economics), market control. Economies of scale arise in a variety of organizational and business situations and at various levels, such as a production, plant or an entire enterprise. When average costs start falling as output increases, then economies of scale occur. Some economies of scale, such as capital cost of manufacturing facilities and friction loss of transportation and industrial equipment, have a physical or engineering basis. The economic concept dates back to Adam Smith and the idea o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cost Curve
In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, productively efficient firms optimize their production process by minimizing cost consistent with each possible level of production, and the result is a cost curve. Profit-maximizing firms use cost curves to decide output quantities. There are various types of cost curves, all related to each other, including total and average cost curves; marginal ("for each additional unit") cost curves, which are equal to the differential of the total cost curves; and variable cost curves. Some are applicable to the short run, others to the long run. Notation There are standard acronyms for each cost concept, expressed in terms of the following descriptors: *SR = short run (costs spent on non-reusable materials e.g raw materials) *LR = long-run (cost spent on renewable materials e.g equipment) *A = average (per unit of output) *M = marginal (for an addition ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Experience Curve Effects
In industry, models of the learning or experience curve effect express the relationship between experience producing a good and the efficiency of that production, specifically, efficiency gains that follow investment in the effort. The effect has large implications for costs and market share, which can increase competitive advantage over time. History: from psychological learning curves to the learning curve effect An early empirical demonstration of learning curves was produced in 1885 by the German psychologist Hermann Ebbinghaus. Ebbinghaus was investigating the difficulty of memorizing verbal stimuli. He found that performance increased in proportion to experience (practice and testing) on memorizing the word set. (More detail about the complex processes of learning is discussed in the Learning curve article.) Wright's law and the discovery of the learning curve effect This was later more generalized to: The more times a task has been performed, the less time is required ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economic Growth
In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Output (economics), output of an economy in a given year or over a period of time. The rate of growth is typically calculated as List of countries by real GDP growth rate, real gross domestic product (GDP) growth rate, List of countries by real GDP per capita growth, real GDP per capita growth rate or List of countries by GNI per capita growth, GNI per capita growth. The "rate" of economic growth refers to the Exponential growth, geometric annual rate of growth in GDP or GDP per capita between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over the period, and ignores any fluctuations in the GDP around this trend. Growth is usually calculated in "real" value, which is real v ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Learning-by-doing (economics)
Learning-by-doing is a concept in economic theory by which productivity is achieved through practice, self-perfection and minor innovations. An example is a factory that increases output by learning how to use equipment better without adding workers or investing significant amounts of capital. With roots all the way by to Adam Smith's analysis of pin manufacturing, the quantification of the idea was realised from the manufacturing of B17 Flying Fortress bombers during world war II. For B17's the costs reduced proportionally with the cumulative manufacturing, rather than with ongoing volume. This explains the non-linearity of learning-by-doing cost reduction, as seen for example in semiconductor manufacturing or with solar PV production. The concept of learning-by-doing has been used by Kenneth Arrow in his design of endogenous growth theory to explain effects of innovation and technical change. Robert Lucas, Jr. adopted the concept to explain increasing returns to embodi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Corporate Finance
Corporate finance is an area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to Shareholder value, maximize or increase valuation (finance), shareholder value.SeCorporate Finance: First Principles Aswath Damodaran, New York University's Stern School of Business Correspondingly, corporate finance comprises two main sub-disciplines. Capital budgeting is concerned with the setting of criteria about which value-adding Project#Corporate finance, projects should receive investment funding, and whether to finance that investment with ownership equity, equity or debt capital. Working capital management is the management of the company's monetary funds that deal with the short-term operating balance of current assets and Current liability, cu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
The Nature Of The Firm
"The Nature of the Firm" (1937) is an article by Ronald Coase published in the economics journal '' Economica''. It offered an economic explanation of why individuals choose to form partnerships, companies, and other business entities rather than trading bilaterally through contracts on a market. The author was awarded the Nobel Memorial Prize in Economic Sciences in 1991 in part due to this paper. Despite the honor, the paper was written when Coase was an undergraduate and he described it later in life as "little more than an undergraduate essay." The article argues that firms emerge because they are better equipped to deal with the transaction costs inherent in production and exchange than individuals are. Economists such as Oliver Williamson, Douglass North, Oliver Hart, Bengt Holmström, Arman Alchian and Harold Demsetz expanded on Coase's work on firms, transaction costs and contracts. Economists and political scientists have used insights from Coase's work to explain th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Drag (physics)
In fluid dynamics, drag, sometimes referred to as fluid resistance, is a force acting opposite to the direction of motion of any object moving with respect to a surrounding fluid. This can exist between two fluid layers, two solid surfaces, or between a fluid and a solid surface. Drag forces tend to decrease fluid velocity relative to the solid object in the fluid's path. Unlike other resistive forces, drag force depends on velocity. Drag force is proportional to the relative velocity for low-speed flow and is proportional to the velocity squared for high-speed flow. This distinction between low and high-speed flow is measured by the Reynolds number. Drag is instantaneously related to vorticity dynamics through the Josephson-Anderson relation. Examples Examples of drag include: * Net force, Net Aerodynamic force, aerodynamic or Fluid dynamics, hydrodynamic force: Drag acting opposite to the direction of movement of a solid object such as cars, aircraft, and boat hulls. * Viscou ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Beam (structure)
A beam is a structural element that primarily resists loads applied laterally across the beam's axis (an element designed to carry a load pushing parallel to its axis would be a strut or column). Its mode of deflection is primarily by bending, as loads produce reaction forces at the beam's support points and internal bending moments, shear, stresses, strains, and deflections. Beams are characterized by their manner of support, profile (shape of cross-section), equilibrium conditions, length, and material. Beams are traditionally descriptions of building or civil engineering structural elements, where the beams are horizontal and carry vertical loads. However, any structure may contain beams, such as automobile frames, aircraft components, machine frames, and other mechanical or structural systems. Any structural element, in any orientation, that primarily resists loads applied laterally across the element's axis is a beam. Overview Historically a beam is a squared ti ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Square–cube Law
The square–cube law (or cube–square law) is a mathematical principle, applied in a variety of scientific fields, which describes the relationship between the volume and the surface area as a shape's size increases or decreases. It was first described in 1638 by Galileo Galilei in his ''Two New Sciences'' as the "...ratio of two volumes is greater than the ratio of their surfaces". This principle states that, as a shape grows in size, its volume grows faster than its surface area. When applied to the real world, this principle has many implications which are important in fields ranging from mechanical engineering to biomechanics. It helps explain phenomena including why large mammals like elephants have a harder time cooling themselves than small ones like mice, and why building taller and taller skyscrapers is increasingly difficult. Description The square–cube law can be stated as follows: Represented mathematically: A_2=A_1\left(\frac\right)^2 where A_1 is the orig ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economies Of Scope
Economies of scope are "efficiencies formed by variety, not volume" (the latter concept is "economies of scale"). In the field of economics, "economies" is synonymous with cost savings and "scope" is synonymous with broadening production/services through diversified products. Economies of scope is an economic theory stating that average total cost (ATC) of production decrease as a result of increasing the number of different goods produced. For example, a gas station primarily sells gasoline, but can sell soda, milk, baked goods, etc. and thus achieve economies of scope since with the same facility, each new product attracts new dollars a customer would have spent elsewhere. The business historian Alfred Chandler argued that economies of scope contributed to the rise of American business corporations during the 20th century. Economics The term and the development of the concept are attributed to economists John C. Panzar and Robert D. Willig (1977, 1981). Their 1981 article n ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Total Cost
In economics, total cost (TC) is the minimum financial cost of producing some quantity of output. This is the total economic cost of production and is made up of variable cost, which varies according to the quantity of a good produced and includes inputs such as labor and raw materials, plus fixed cost, which is independent of the quantity of a good produced and includes inputs that cannot be varied in the short term such as buildings and machinery, including possibly sunk costs. Total cost in economics includes the total opportunity cost (benefits received from the next-best alternative) of each Factors of production, factor of production as part of its fixed or variable costs. The additional total cost of one additional unit of production is called marginal cost. The marginal cost can also be calculated by finding the derivative of total cost or variable cost. Either of these derivatives work because the total cost includes variable cost and fixed cost, but fixed cost is a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
