HSC Production Management and Marketing 1st Paper 3rd Chapter Note Scale of Production. (i) Small Scale Production: If a firm produces goods with small sized plants, the scale of production is said to be small-scale production. The small scale of production is associated with low capital output and capital-labor ratios. In the small scale of production, the economies of scale do not occur to the firm. (ii) Large Scale of Production: If a firm uses more capital and larger quantities of other factors, it is said to be operating on large scale production. Large-scale production enjoys both internal and external economies of scale. (iii) Optimum Scale of Production. The optimum scale of production refers to that size of production which is accompanied by the maximum net economics of scale, it is a scale at which the cost of production per unit is the lowest.
HSC Production Management and Marketing 1st Paper 3rd Chapter Note Scale of Production
If a firm carries on production with large or more plants, it is known as large-scale production. On the contrary, if the production is small and the size of plants smaller, it is called small-scale production. The scale of production may have certain advantages and disadvantages. The economies of scale may be divided into two parts— Internal economies and external economies.
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