Economies Of Scale And Diseconomies Of Scale

WEEK 3 DISCUSSION 1 Sarah owns a bakery that has four ovens, one full-time exempt administrative employee, and eight part-time hourly bakers. Based on this information, respond to the following:  Distinguish between the short run and the long run. What will differentiate the short run and the long run?  Describe fixed inputs and variable inputs. Which inputs are fixed and which are variable in Sarah ’sbakery?  Why would marginal productivity decline after a certain level of production?  How can this problem of diminishing returns or marginal productivity be reduced or removed? Your initial post should be aminimum of 300 words. Guided Response: Respond substantively (a minimum of 100 words) to at least two of your classmates ’posts. CLASSMATE 1: (Littonia Marshall) Distinguish between the short run and the long run. Short run refers to aperiod of time within which the quantity of at least one input will be fixed, and quantities of other inputs used in the production of goods and services may be varied. Production of goods and services occur in the short run. Firms can increase output in ashort run by increasing the inputs of variable factors of production. Variable factors of production that can be increased in the short run are labor and raw materials. Labor can be increased by increasing the number of hours worked per employee, and raw materials can be increased in the short run by increasing order levels. The long run refers to aperiod of time in which the quantities of all inputs used in the production of goods and services can be varied. In the long run, all factors of production and costs involved in the production are variable. The long run allows firms to increase/decrease the input of land, capital, labor, and entrepreneurship thereby changing levels of production in response to expected losses of profits in the future. In the long run, afirm can enter an industry that isdeemed profitable, exit an industry that isno longer profitable, increase its production capacity by building anew factory in response to expected increase profits, and produce less in response to expected losses. What will differentiate the short run and the long run? Short run and long run are concepts that are found in the study of economics. Short run and long run shows the flexibility that decision makers in the economy have over different periods of time. Describe fixed inputs and variable inputs. Fixed and variable inputs are most important for the analysis of short-run production by acompany(firm). Fixed are inputs in the production of goods and services that does not change in the short run .Variable Inputs quantity, can be changed in the time period under consideration. Which inputs are fixed and which are variable in Sarah ’sbakery? Oven, bakery space and wages on fulltime employee are fixed. Electricity and wages of part-time hourly bakers are variable. Why would marginal productivity decline after acertain level of production? When acompany keeps increasing the amount of acertain part of production, the marginal cost will increase also. After awhile, the marginal cost will exceed the marginal revenue, this causes the marginal productivity to decline. How can this problem of diminishing returns or marginal productivity be reduced or removed? The way to overcome diminishing returns isto reinvent -create anew system or adjust the old one. Diminishing returns isthe decrease in incremental output of aproduction process as the amount of a single factor of production isincrementally increased, holding all other factors of production equal. The law of diminishing marginal productivity states that in the productive process, increasing afactor of production by one unit, while holding all other production factors constant, will eventually return a lower unit of output per incremental unit of input. The law of diminishing returns do not slow down production capabilities, but itwill reach aproduction curve. By producing an additional unit of output, this causes aloss(negative return). Because of diminishing returns, output stays positive but productivity and efficiency decrease. References: Amacher, R., &Pate, J.(2019). Principles of microeconomics (2nd ed.). Bridgepoint Education. CLASSMATE 2: (Hailey Jackson ) Good Evening Everyone,  Distinguish between the short run and the long run. What will differentiate the short run and the long run? The short run isdefined as the period of time that istoo short to vary all of the inputs and one or more of the inputs must remain fixed. Long run is the period of time in which all inputs, including plant and equipment, can be varied (Amacher & Pate, 2019). To differentiate, there are not fixed inputs in the long run.  Describe fixed inputs and variable inputs. Which inputs are fixed and which are variable in Sarah ’sbakery? In our text book, fixed inputs are defined as the productive resources that cannot be varied in the short run; variable inputs are defined as the productive resources that can be increased or decreased in the short run (Amacher &Pate, 2019). In Sarah's bakery, the variable input would be the eight part-time hourly bakers and the bakery, four ovens, and one full-time exempt administrative employee would considered to be the fixed inputs.  Why would marginal productivity decline after acertain level of production? Marginal productivity would decline after acertain level of production because of the consumption increasing. "When total utility isincreasing, marginal utility isdeclining, illustrating the principle of diminishing marg inal utility. At the point that total utility begins to decline, marginal utility becomes negative" (Amacher &Pate, 2019).  How can this problem of diminishing returns or marginal productivity be reduced or removed? The problem of diminishing returns or marginal productivity can be reduced or removed by Sarah examining the supply chain production of the bakery for redundancy or productions that interfere with one another because itcould help with discovering any underlying causes of the production decline after acertain level of production. References: Amacher, R., &Pate, J.(2019). Principles of microeconomics (2nd ed.). Bridgepoint Education.