EBK OM
EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 10, Problem 1DQ
Summary Introduction

Interpretation:Economies and diseconomies of scale at a college environment are to be discussed.

Concept Introduction:Economies of scale refers to the cost advantages that the businesses gain in terms of increased production while maintaining a decreased cost per unit.

Diseconomies per scale occurs when a company starts gaining cost disadvantages when the business starts to grow large that they fail in maintaining lower costs.

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Explanation of Solution

Economies of Scale in College Environment

  1. Enrolling the maximum number of students per batch covering up full capacity of a classroom. This will minimize the additional costs such as A/C, electricity, water and also other costs such as staff overtime payments and so on.
  2. Exams to be conducted for several batches at once, this will also help the business in gaining the cost advantage by saving the A/C, electricity, water and also other costs such as staff overtime payments in correcting the papers as well as in releasing the results.
  3. Holding graduation ceremonies for several batches is essential as it will give the ability to cover up the huge costs that will incur due to such ceremonies.

Diseconomies of Scale in College Environment

  1. Allocation of large classrooms for a lecture that has a considerably low head count, this will be a waste of A/C, electricity, water and also other costs such as staff overtime payments.
  2. Printing the notes when they already appear on the online student portal.
  3. Printing the notes in bulk more than the requirement.

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PS.53 Brother I.D. Ricks is a faculty member at BYU-Idaho whose grandchildren live in Oklahoma and California. He and his wife would like to visit their grandchildren at least once a year in these states. They currently have one vehicle with well over 100,000 miles on it, so they want to buy a newer vehicle with fewer miles and that gets better gas mileage. They are considering two options: (1) a new subcompact car that would cost $18,750 to purchase or (2) a used sedan that would cost $12,750.They anticipate that the new subcompact would get 37 miles per gallon (combined highway and around town driving) while the sedan would get 26 miles per gallon. Based on their road tripping history they expect to drive 13,000 miles per year. For the purposes of their analysis they are assuming that gas will cost $2.93 per gallon.Question: How many miles would the Ricks need to drive before the cost of these two options would be the same? (Display your answer to the nearest whole number.) (Hint:…
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