Economics Assignment: Supply, Demand & More
Added on 2020-04-07
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Economic Assignment 1ECONOMIC ASSIGNMENTBy (Student’s Name)Professor’s NameCollegeCourseDate
Economic Assignment 21. Question 1CSR and Boral were able to operate as distinct companies before the fall in demandbecause there was a high demand hence each was able to make sales before the diseconomies ofscale set in due to the falling productivity. Economies of scale (EoS) describes cost-advantageswhich emerges following the enlarged product output. The EoS emerges since the reciprocalassociation between produced output and the per unit fixed cost (FC); i.e. the greater the productquantity produced, the lower per unit FC since such a cost remain spread out across the biggerproduct numbers. The EoS could further reduce variables costs a unit because of synergies andefficiencies of operations. The economies of scale is categorized in to two main types, internal aswell as external. Internal EoS emerges from within the firm whereas the external EoS arise fromextraneous variables like size of the industry.A merger is feasible in this case between CSR and Boral joining together to establish anoligopoly. The novel oligopoly organization shall have a bigger share of market that assist themgain economies of scale and hence become more profitable even in the face of the decliningdemand. The merger shall further decrease competition and might culminate in higher prices forthe consumers of brick products because they are the only firms in the market. The merger hasthe benefit of the EoS. This occurs where a bigger company with larger output is capable ofreducing average-costs (AC). The lower AC can reduce the consumers’ price.
Economic Assignment 3The EoS will be technical, bulky buying, financial and organizational. Technicaleconomies is achieved when the entity has substantial FC hence novel superior organizationwould have reduced AC (David Myers CEcD 2015). Bulk buying will result where the hugerfirm will receive discount when it buys bulky quantities of the raw-materials. Financial EoS willresult where better rate of interest will be available for the large company. Organizationaleconomies of scale will arise the merger will have one efficient head office rather than twooffices. The firm will increase in size due to the merger and hence gain from the many of suchfactors. The merger will be more efficient, realize profit which enable more R&D and strugglingfirm will benefit from the new management (Polkinghorn 2016). Question 2:In case the new joint proceeds, the new market will turn into monopoly. This will lead toa rise in price with a reduction in quantity and a subsequent increase in profitability. Since these
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