Saturday, September 1, 2018

Real time example with economic concept

Example for IRTS(INCREASED RETURNS TO SCALE) :

When i was doing my graduation , we were having some exhibition. In that we were asked to make some stalls in our college. Myself and my team mates were thinking about making an soda stall. The exhibition was about to happen for 3 days. For the first day we made our production for 1000 people and by the end of the day we observed that all those were sold and students and staffs were asking for more. On considering the demand on the first day we planned to increase the production for 1500. Surprisingly the demand for the second day was much higher that the first day. But the problem we faced was that even increasing the quantity for 1500, it was not sufficient. At that time as an UG student i could understand that the demand was more. But after Studying about IRTS i could relate the situation to the concept.

Concept:

The concept says that when the proportion of the output increased is greater that of the input, then this situation is called "INCREASED RETURNS TO SCALE".

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