How do you explain economies of large-scale production

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1. Which is more economical, a plant with a payroll of $400 a week, with $100 of overhead, and with an output of 100 units per week, or a plant with a payroll of $80,000 a week, an overhead of $100,000 a week, and an output of 50,000 units per week?

2. How do you explain economies of large-scale production? Why do certain businesses, such as cigarette manufacture, seem to enjoy them, whereas other businesses, such as barbering, do not?

3. Compare the situations of a farmer selling his wheat crop and an auto company executive selling his car "crop." What are the major forces that bear on each, when it comes to pricing the output?

Reference no: EM13860097

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