explain how a variety of forces effects long run costs scale scope learning and purchasing economies

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discussion about

Explain how a variety of forces effects long-run costs: Scale, scope, learning, and Purchasing economies

and reply for these two :

1-

“Starting with the economy of scope and economy of scale. These two concepts help a company to cut long-term costs. The economies of scale are the advantage of producing more products. There is an inverse relationship between the fixed costs per unit and volume of output of products. When producing or buying a larger number of goods (bulk), the price goes down.

Also, economies of scope states that when there is an increasing variety of goods produced, the average total cost will decrease. For instance, when a production line produces different products, the total cost will be lower that producing the different products using more than one production line (NICKOLAS, 2019)

Learning results in a decrease in cost of production as a result of the knowledge increase for the labors and managers. They will be familiar with the processes and lead to improve their efficiency level. Learning and being familiar with the production processes leads to have more output with the same input and labor hours. Purchasing economies is the advantage of purchasing material or products, for instance, in bulk and get discounts. This would affect the long-run costs (“The long run – increases in scale,” 2019)”

and

2-

” First of all, we can define the long run as it is the period in which all the production factors and costs are variable. Besides, in the long run, companies can adjust all costs (Mitchell Grant and Will Kenton, 2003)

The long-term average cost curve can determine the range and strength of economies and economies of scale. Therefore, when the average long-term cost decreases with increased production, economies of scale.

If the cost of producing one or more producers products together is less expensive than multiple product companies to produce similar quantities from each product, the economies of scope will exist.

Also, if we want to talk about how the economics of learning or experience affect the long run we observe many managers and workers in business differ in professions, they learn to practice it. As total cumulative output increases, learning or experience economies cause the long-run average cost to fall at every output level.”

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