(b) Explain the following: (i) division of labour; (ii) economies of scale.
(c) Outline any four internal economies of scale.
(a) An industry refers to a group of companies or organizations that are involved in the production of similar goods or services. An industry can be further divided into sub-industries based on the specific products or services they offer.
(b)(i) Division of labour refers to the process of breaking down a complex task into smaller, more manageable parts, and assigning each part to a different worker. This allows for greater specialization and efficiency, as each worker becomes skilled in a specific aspect of the task.
(ii) Economies of scale refer to the cost advantages that a company or industry realizes as it increases production. The larger the scale of production, the lower the cost per unit, as fixed costs are spread over a larger number of units.
(c) Four internal economies of scale are:
Technical Economies of Scale: This refers to the efficiency gains that result from the use of better technology and equipment.
Managerial Economies of Scale: This refers to the efficiency gains that result from improved management practices, such as better planning and coordination.
Financial Economies of Scale: This refers to the cost savings that result from having access to more funds, either through increased profits or through borrowing at lower interest rates.
Marketing Economies of Scale: This refers to the cost savings that result from the ability to spread marketing and advertising costs over a larger number of units. By reaching a larger audience, a company can achieve greater economies of scale in marketing its products.
(a) An industry refers to a group of companies or organizations that are involved in the production of similar goods or services. An industry can be further divided into sub-industries based on the specific products or services they offer.
(b)(i) Division of labour refers to the process of breaking down a complex task into smaller, more manageable parts, and assigning each part to a different worker. This allows for greater specialization and efficiency, as each worker becomes skilled in a specific aspect of the task.
(ii) Economies of scale refer to the cost advantages that a company or industry realizes as it increases production. The larger the scale of production, the lower the cost per unit, as fixed costs are spread over a larger number of units.
(c) Four internal economies of scale are:
Technical Economies of Scale: This refers to the efficiency gains that result from the use of better technology and equipment.
Managerial Economies of Scale: This refers to the efficiency gains that result from improved management practices, such as better planning and coordination.
Financial Economies of Scale: This refers to the cost savings that result from having access to more funds, either through increased profits or through borrowing at lower interest rates.
Marketing Economies of Scale: This refers to the cost savings that result from the ability to spread marketing and advertising costs over a larger number of units. By reaching a larger audience, a company can achieve greater economies of scale in marketing its products.