Economies of Scale Assignment help
Added on 2020-03-23
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Economics Assignment 1Part A: Micro-Economics:1-Economies of Scale: When a company or a business achieves more efficiency and outputwith decreased input, its marginal costs in terms of production decreases, thus business issaid to have achieved the economies of scale (Tegtmeier 2013). For Example, discounton bulk purchases, information sharing related economies, department or laborspecialization etc.Market Types and Importance of Economies of Scale:Perfect Market:In such a market there are almost infinite number of buyers and sellersand so no one seller can influence market in their way. Economies of Scale have usually no importance in such markets as each supplier assumesconstant returns on economies, and so the unit costs remain the same. One basic reason ofthis is the price is set my market and no single supplier can set price on his own (David Myers 2015).Monopoly: Such a market has one big supplier of particular goods or services. He may bedoing differentiation and controls the whole market.In a monopolistic market, the economies of scale is important, as it keeps increasing andtotal average cost keeps falling. This is due to considerable amounts of fixed costs, bigdiscounts on purchases and large scale production.Oligopoly: In an oligopoly instead of one supplier, a number of limited producers ofgoods or services collude with one another and derive the market. They may be two ormore in number (Polkinghorn 2016). Oligopoly Firms are also able to take advantage ofeconomies of scale by decreasing their average costs.
Economics Assignment 2Monopolistic Competition: Such a market combines the features of a monopoly andperfect competition. Every provider of goods or services in large enough to influence itsmarket but is differentiated from the other one.Economies of scale are achieved by every player due to large production capacities, somostly the competition is based on quality, customer retention and differentiation(Dunne, Klimek, Roberts and Xu 2013). 2-With the commencement of 21st century the Australian industry had two key playerQantas and Ansett along with two new entrants Virgin Blue, and Impulse airlines. Withthe acquisition of Impulse airline by Qantas and collapse of Ansett Group, only twoairlines were left to compete in Australian Industry. So it showed a “Monopoly” of onebig Airline Qantas in 2002-03. Although Virgin Blue was expanding, but still largemarket share (almost 80%) was possessed by Qantas airlines in domestic industry andVirgin Blue had to do more to transform the market into “Perfect Competition” or an“Oligopoly”.In International market of Australia the only “Flag Carrier” remained was the “QantasAirlines” in 2003, but the international Market share was very low and it had to face“Perfect Competition”. This was because Qantas airlines were facing manyunmanageable circumstances at that time. In their annual accounts of 2003 Qantasthemselves stated reduced planned international flights by 20%. Additionally they had tobear low levels of working capitals and redundancies:“These initiatives resulted in a one off charge of $91 million for the write-down ofBoeing 767-200 fleet, which will be retired by the end of 2003-04 financial Year.”Qantas Audited Accounts 2003
Economics Assignment 3But unlike in 2003 now Qantas has a big international market share around 28% but is losing its domestic share. Part B: Macro-Economics:1.If we take a look at macroeconomic data, France’s economy is currently undergoing“Expansion” and soon may hit “Cyclic Peak” followed by a “Recession” in some years.Because the GDP has almost reached its maximum level it can be predicted as a “bust” inthe economy. Although France has a steady trend in terms of GDP and unemploymentthe GDP of the country may start declining at this stage, the employment rate of thecountry is decreasing but with a slower rate as a result the economy can contract. Thesmall decrease in unemployment rate may not be stable as Macron has implemented thesame policies as former leaders. This all can result in a tight labor market and futureuncertainty about the inflation. Decreased Tax cuts and more government spending isneeded to meet the aggregate demand in the economy and making the buyer purchasingpower stronger. “Most of the unemployed, lack qualifications that fit the labor market’sneeds. France’s unemployment rate, at around 10%, suggests that this skill gap runsdeep.” Article by Bloomberg: The French is bad in a crisis2.French Economy in 2017 using AD/AS model.The AS describes the total amount of commodities in French economy available at allfeasible levels of prices whereas AD denotes the amount of commodities in Frencheconomy that will be purchased at all feasible level of prices. In the economy, as theprices of most commodities alter, the level of price alters and individual and businessesalter how much they purchase (Baldwin and Scott 2013). The AS curve on graph displays
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