Theory question 104
Theory of Production(a) Distinguish between small-scale production and large-scale production.
(b) Describe any five internal economies of large-scale production.
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(a) Small-scale production is production of a small output with little capital, few workers and simple methods, usually serving a local market. Large-scale production is production of a large output with much capital, many workers, division of labour and machines, serving wide markets.
(b) Any five: technical economies (large efficient machines, division of labour); managerial economies (specialist managers); financial economies (easier, cheaper credit); marketing economies (bulk buying of inputs and bulk selling, advertising spread over many units); risk-bearing economies (diversification); research economies; welfare economies (better staff facilities raise productivity).
Internal economies are cost savings from the firm's own growth.