In this article we will discuss about the scope and nature of economics. Economists differ in their views regarding the scope of economics. Thus, in accordance with the view of Robbins, economics would also study the problem faced by Robinson Crusoe, who lives in an isolated island with no contact with the rest of the world.
The output of item A, therefore, reduces the price of producing item B. Additionally, the company can consolidate and streamline its production process, making it easier to produce both a razor and a tube of toothpaste, further decreasing average unit costs.
Different Ways to Achieve Economies of Scope Economies of scope are essential for any large business, and a firm can go about achieving such scope in a variety of ways. First, and most common, is the idea that this operational efficiency is gained through related diversification.
The company expanded its product line to service numerous, unrelated end users, such as consumers and hospitals, all of which required a unique type of paper product.
Two regional retail chains, for example, may merge with each other to combine different product lines and reduce average warehouse costs. Finally, a company that wants to achieve economies of scope can link its supply chain through vertical integration.
The ownership of a supply chainfrom raw materials to the point of saleallows many companies to consolidate the logistical process by combining multiple products into one production process, thus reducing costs. Advantages of Economies of Scope There is some discrepancy between economists when it comes to the importance of economies of scale because some believe that the theory can only apply to specific industries.
For those that apply it, there are some advantages, including: A flexible mix of products and product design Quick responses to market demandproduction design, and output rates Less waste and lower training which lead to a reduction in costs A reduction in risk — a company that diversifies its product line in many different markets can reduce its risk Economies of Scope vs.
Economies of Scale While economies of scope are characterized by efficiencies formed by variety, economies of scale are characterized by volume.
The latter involves the reduction of the average cost, or the cost per unit, that stems from increasing production for one type of product.Economics. The term and the concept's development are attributed to economists John C.
Panzar and Robert D.
Willig (, ). Whereas economies of scale for a firm involve reductions in the average cost (cost per unit) arising from increasing the scale of production for a single product type, economies of scope involve lowering average cost by producing more types of products.
Scope of Economics: While discussing the subject-matter and definition of Economics, we have said something about the scope of Economics too.
But there are a few more things which we have to discuss in considering the scope of Economics. Jun 09, · What is the scope of economics for career?
Economics is the study of deep insight in economical functions to handle the global market. Careers in economic has various options, with job roles covering everything from food and agriculture to business and banking.
Scope of economics can be classified broadly into two categories: Microeconomics: Microeconomics is the study of examining every individual economic activity, industries, and their interaction.
It mainly observes how a person earns and spends his income. The scope of economics is very wide. It includes the subject matter of economics, whether economics is a science or an art and whether it is a positive or a normative science.
The scope of economics is very wide. It includes the subject matter of economics, whether economics is a science or an art and whether it is a positive or a normative science.