economies of scale and economies of learning -- 17.55J Final ID and Article review

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Subject: economies of scale and economies of learning

Author:
Laura Colon-Melendez

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Date Posted: 05:55:52 05/20/02 Mon
In reply to: Laura Colon-Melendez 's message, "value-added chain, market failure" on 04:38:01 05/20/02 Mon

LEARNING CURVE AND ITS EFFECTS
cost reductions resulting from skill improvements based on repetitive (usually production related) experiences (the more shoes you make, the less expensive it becomes to make them, therefore, the more you can make. The curve looks like 1/x in the first quadrant, with quantity (units) being in the x axis and cost per unit in the y axis. The more shoes you make, the smaller the c.p.u.

ECONOMIES OF SCALE
Definition: Relative saving realized when the size of a plant, enterprise, etc., is increased. For example, lower production cost of an automobile due to production of a large number of cars of the same type is due to economy of scale. There may also exist a DISECONOMY OF SCALE where the increased size contributes to an increase in unit cost.
Interpretation in the context of Latin America: underdevelopment; development theory.
Latin America could not compete with those who already had all the knowledge and technology and who already had developed economies of scale. The argument that Latin American countries could not develop effective economies of scale because of these disadvantages and others led to development theory and to ISI (mid 20th century)

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Replies:

Subject	Author	Date
Re: economies of scale and economies of learning	laura col�n-mel�ndez	18:29:16 05/20/02 Mon