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Is More Better?

Is More Better?. Economics of Mass Production. What is Mass Production?. Characteristics: Large Number of Units Produced Low Cost Per Unit Large Amount of Capital Factories Machines Coordinated Work Force Assembly Line Fashion Division of Labor. Visual 23.1. Fixed Costs

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Is More Better?

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  1. Is More Better? Economics of Mass Production

  2. What is Mass Production? • Characteristics: • Large Number of Units Produced • Low Cost Per Unit • Large Amount of Capital • Factories • Machines • Coordinated Work Force • Assembly Line Fashion • Division of Labor Visual 23.1

  3. Fixed Costs Do not change when the number of units produced increases or decreases Capital Utilities Property Taxes Variable Costs Costs that change when the number of units produced increases or decreases Labor Raw materials What Costs are Associated with Mass Production? Fixed Costs + Variable Costs = Total CostTotal Cost/Units Produced = Cost Per Unit Visual 23.2

  4. Figuring the Costs • Weekly output: _______ cans • Total fixed cost: $10,000 a week • Variable cost per unit: 25 cents per can • Total variable cost: _________ • Total cost: __________ • Divided by _________ cans • Cost per unit: ___________ Visual 23.3

  5. What is an Economy of Scale? • The situation where the average total cost of making a product declines as production increases in the long run. • The more units are produced, the cheaper the units are to produce

  6. Andrew Carnegie Activity 23.1 • Prepare for Quiz • Quia

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