Role of Small-Scale Industry ill Underdeveloped Countries

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Role of Small-Scale Industry ill Underdeveloped Countries The small-scale industry has a special role to play in an under-developed country. Considering the resource position of the under-developed countries, the small-scale industries fit excellently in their development plans for several reasons: (i) They have a vast employment potential; (ii) Tile offer limitless opportunities for self-employment; (iii) They are capital-light and capital is what such […]

Small Scale Industries

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Small Scale Industries Small Scale industries definition has undergone many changes from time to time since 1950. To the definition of SIS is on the basis of investment. In  February 1997 the investment limit in S5I and ancillary industries were raised to Rs. 3 crore and that of tiny units to Rs. 25 Lakh. In 1999 the inventiveness limit of […]

Survival of Small Businesses

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Survival of Small Businesses The advantages enjoyed by small- scale business enable it to compete successfully against big business. There are, besides, other circumstances which help a small business and in which large-scale production is not economical. When, for instance, the demand for a commodity is small and fitful, expansion of business is inadvisable. There arc several factors which help the small […]

External Dis economies (Its effect)

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External Dis economies (Its effect) Due to external dis-economies, (if they are more powerful) will shift the LAC (Long run average cost curve) upward to LAC’. In this case the firm will be producing ‘OQ’ amount of quantity earlier at ‘ON’ cost, now due to external dis economies it will produce at ‘OR’ cost. Limits to the Expansion of a […]

Relation between internal and external economies

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Relation between internal and external economies No hard and fast line can be drawn between internal and external economies. When a number of firms combine into one external economies become internal economies. Whether particular economies are internal or external depends upon what operations it is profitable to combine. Internal economies are  result of expansion of individual firms, whereas external economies are the […]

External Economies

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External Economies External economies are those economies which accrue to each member firm as a result of the expansion of the industry as a whole. Expansion of an industry may lead to the availability of new and cheaper raw materials, tools and machinery, and to the discovery and diffusion of a superior technical knowledge. Some raw materials and tools may be […]

Real and Pecuniary Economies

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Real and Pecuniary Economies Internal economies can be classified as Real Economies and Pecuniary Economies. Real economies arise from reduction in the physical quantity of inputs. These may be economies in (i) production (ii) marketing or salesmanship (iii) managerial due to specialization, decentralization in decision-making and mechanization e.g. computerization and (iv) transport and storage economies. Pecuniary Economies arise from lower prices for […]

Concept of Indivisibility

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Concept of Indivisibility A very important source of economy in a big concern arises from the use of aa indivisible factor of production. This concept  divisibility requires careful understanding. Just tbidk of a hostel kitchen. It must have a minimum equipment of utensils and secants, e.g., it must have at least one cook and one boy servant This is the indivisible […]

Diseconomies of Scale

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Economizes of Scale Large-scale production is not without its disadvantages. Some of these disadvantages are. Over-worked Management. A large scale producer cannot pay full attention to every detail. Costs often rise on account of the dishonesty of the employees or waste of materials by them. This is due to the lack of supervision. Owing to laxity of control costs of production go up. […]

SCALE OF PRODUCTION

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SCALE OF PRODUCTION The scale of production has an important bearing on the cost of production. It is the manufacturers’common experience that larger the scale of production. the lower generally is the average cost of production. That is why the entrepreneur is tempted to enlarge the scale of production so that he may benefit from the resulting economies […]