WEEK 10

CHAPTER 4 : MARKET STRUCTURES

Market is an arrangement that facilitates the buying and selling of a product, service, factor of production or future commitment.

Market structure refers to the number and distribution size of buyers and sellers in the market of particular goods and services. Market structure divided to perfect competition, monopolistic, monopoly and oligopoly.

                                 

WEEK 9

COST OF PRODUCTION

Types of cost production

Economies of scale
Internal of economies of scale

• Labour economy specializing of labour can help increasing the efficiency of labour and cut the cost of production.
• Managerial economies every department is under the employment of professionals. It will increase the efficiency and cut cost
• Marketing economy large firm can buy product in bulk at a cheap price, This cuts cost of production. Small firm cannot obtain this benefit.
• Technical economies technology can improve production process. This is where the firm uses the capital (machines) in maximum usage.
• Financial economy the ability for firm to obtain funds or loan from others
• Risk bearing economy the willingness for the firm to bear the risks in the business

External of economies of scale

• Economies of government action firm grab the opportunity from governments actions. Example: subsidies
• Economies of concentration based on the location. Firm look for high concentration of customers in the area. This includes transportation and communication from the shop to customers
• Transportation transportation can cut cost because it can help develop more in distant places.

DISECONOMIES OF SCALE CAUSES
Some of the possible causes of diseconomies of scale are
- difficulties in control and supervision,
- slow decision making due to excessive size of administration,
- lack of employee motivation.