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Q. Explain about Inventory Economies?
Inventory Economies:Role of inventories is to aid the firm in meeting random changes in the output and the input sides of the operations of the firm. Purpose of inventories is to smooth out the supply of outputs and the supply ofinputs.
Inventories on spare parts, raw materials and finished products increase with the scale of production though they don't increase proportionately with the increase in size of output. Hence as the size of output amplifies the firm can hold smaller percentage of inventories to meet random changes.
The use of arc elasticity in economic analysis involves a good deal of chariness since it is capable of being misinterpreted. Arc elasticity coefficients vary between the same two
Q. Describe about Theory of Firm? Theory of the firm is associated to comprehending how firms come into being, what are their objectives, how they act and enhance their perform
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