经济学第五章.pptVIP

* * So if you think you are doing really well in all the other units – keep an eye on that marginal unit as it can really have a big impact on your GPA. * * * * * * * * * * * * * * * * * * * * Henry Ford, the founder of Ford Motor Company, introduced two new ideas that allowed him to take advantage of economies of scale in his workshops. First, he used interchangeable parts so that unskilled workers could be used to assemble cars. Second, instead of having groups of workers moving from one stationary car to the next, he had the workers remain stationary while the cars moved along an assembly line. These ideas helped Ford to produce his Model T at an average cost well below his competitors. Ford believed that a larger plant would help him to take advantage of economies of scales even further. Unfortunately, Ford’s massive River Rouge plant was too large and suffered from diseconomies of scale. Ford’s managers could not coordinate well the production of cars in such a large plant and average costs of production were too high. * It is extremely difficult to judge whether the WA government is right or not. On the one hand, there are no reasons why the public sector should be any different from the private sector in terms of ability to capture benefits of economies of scale. On the other hand, the existing empirical research is inadequate to make a well-justified judgement call whether economic benefits of amalgamation are large enough to compensate for the substantial costs of reforms. Neither NSW nor Victorian governments undertook comprehensive post-hoc studies to prove that their amalgamation experiments were justified. Since local councils provide a wide range of services, it is likely that some services are more likely than others to bring the benefits of economies of scale. See, for example, Dollery, Byrnes and Allan (2007) review for the survey in NSW. Where do marginal costs come from? Marginal cost the change in a firm’s total cost from producing one more