Large firms can install new machines, automatic appliance and adopt other means of superior technology because it is economical […] The large scale production is conducive for the development of technology also. Companies can achieve economies of scale by increasing its production and lowering its cost. Dirty habits of drinking and gambling spread very easily. Scale effects come to picture due to the presence of fixed and variable costs in the production process. Advantages And Disadvantages Of Factors Of Production 2899 Words | 12 Pages These measures may be in the form of a budget surplus, tax increases (mostly indirect), reduced government spending, expand the export sector, public loans to raise funds. Image Courtesy : topdiysolarpanels.net/wp-content/uploads/2013/05/Advantages-and-Disadvantages-of-Geothermal-Energy-1024×618.jpg. Economies of Scale. Read this article to learn about the advantages and disadvantages of large scale production: The following are the merits of large scale production: Internal economies arise within the firm because of the expansion of the size of a particular firm. Under large scale production, producer makes efforts to sell their products in foreign markets. A big portion of wealth is concentrated in the hands of mill owners. This increases profitability. Thus, it spoils the social atmosphere of the society. Disadvantages. In essence, large scale production has both advantages and disadvantages. In other words, ‘Economies of Scale’ or ‘Increasing Returns to Scale’, is a term used by economists to refer to the situation in which the cost of producing an additional unit of … As the industry of the firm grows, more support may come from the suppliers’ side: more variety, more quality, more quantity, etc. Many evils breed. Economies of Scale. They also lose contacts with consumers. A large scale producer cannot pay full attention to every detail in various departments. As a result of increased production, the fixed cost gets spread over more output than before. Economies of scale occur when a company’s production increases, leading to lower fixed costs. The foreign markets may be cut off by wars, etc. With the development of large scale production, there arise many small industries which use its by-products or supply inputs to it. Economies os scale could be calculated by the large scale of production divided by the mass production. Discuss the advantages and disadvantages of having the same product range shown in allIKEA catalogues around the world. A cost disadvantage means your business is unable to create, produce, acquire, transport or distribute goods to customers at rates equal to or better than competitors. This results in the loss of customers to other competitors. scale of. Result is the strikes, lockout etc. Concept of Large-Scale Production 2. 2. Large scale production is in the hands of capitalists rather than Government. The large scale production increases the possibilities of wars. Plant-based fuel can be produced almost anywhere, comes from a renewable resource and often produces cleaner emissions than petroleum-based fuel. Suppose, there are two different factories, each producing 500 units of a commodity. The amount of money spent on advertisement per unit comes to a low figure when production is undertaken on a very large scale. But if the scale of production is enlarged and in one factory we start producing 1000 units of the same commodity, the work can be supervised by one manager. Concept of Large-Scale Production 2. High Cost of Production: ADVERTISEMENTS: The cost of production per unit increases because there is a high cost of labour, a very little scope for division of labour and lesser use of machinery. All wealth and incomes of the country get concentrated in the pockets of big producers due to large scale production. Understanding Economies of Scale . The large scale production cannot easily be adopted itself to the changing circumstances. Disadvantages of Large Firms: Notwithstanding the various economies enjoyed by the large firms there are certain limitations inherent with their size. Control – monitoring the productivity and the quality of output from thousands of employees in big, complex corporations is imperfect and expensive – this links to the concept of the principal-agent problem i.e. Large scale production leads to unequal distribution of wealth in a country. Biofuel production using food crops such as corn, soybeans and sorghum has the potential to alter drastically the world's access to affordable food. unskilled and semi skilled 3. The rich become richer and the poor become poorer. 2. Ease In International Trade In turn, they adversely affect the production. 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