MGEC40H3 Study Guide - Standard Streams, Externality, Takers

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Outline: horizontal boundaries (of the firm: scale/scope of economies (defn + sources, learning curve/ learning economies (defn + sources) Horizontal boundaries refer to the amount of output. Ex: how much of the product market it serves (market share) Vertical boundaries refer to the portion of the output (along the chain of production) that the firm does for itself (rather than outsourcing) Ex: part of a pen 905,89. 42:. 84:984:7. 0/. Outline: sources of diseconomies (of scale/scope, vertical boundaries of the firm. Make or buy decision benefits & costs of using the market. Feedback may occur into any of the previous processes. Scales economies are more likely to occur more than learning economies. Simple production process, but need large amount of capital, high fixed costs. Ex: many automated processes, no learning needed. Labour intensive, complex processes, not a lot of fixed costs, learning occurs. Ex: using ones brain, experience, creativity, low cost, lots of learning.