Most studies have shown that the initial stages of the pharmaceutical manufacturing process usually give rise to _______________
2 answers:
<u>Manufacturing process usually give rise to , After the large fixed (sunk) costs are finally paid off, the manufacturing of pharmaceutical products exhibits
.</u>
Further Explanation:
Diseconomies Of Scale: It takes place when the cost of producing one unit increases with the increase in production.
Reason for the diseconomies of scale:
• Complex Communication channel
• Lack of coordination between the departments
• Managerial inefficiency
Economies Of Scale: Economies of scale arises when the cost of producing one unit decreases with the increase in production.
Reason for the economies of scale:
• Efficient Production
• Reduction in promotion cost
• Cheaper capital
• Reduction in logistics cost
<u>Therefore, When the pharmaceutical company starts their production, the fixed cost is high which leads to diseconomies of scale, but as the level of production increases, it spread the fixed cost which leads to economies of scale. </u>
Learn more:
1. Demand and type of goods
2. Demand and supply of goods
3. Elasticity of demand
Answer details:
Grade: High School
Subject: Economics
Chapter: Economies Of Scale
Keywords: Economies of scale, diseconomies of scale, the pharmaceutical manufacturing process, the large fixed (sunk) costs, pharmaceutical products
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