Applying
Five Economic Concepts
Company:
COKE Sector: Beverage
1st
concept
Economics of
Scale
As a company
is able to produce in huge quantities it is able reduce it’s per unit cost of
production thereby enjoying benefits of of producing in large quantities.
2nd
Concept
Producer
Surplus
A producer
is able to earn producer surplus when he/she is able to charge a price more
than his minimum selling price
3rd
Concept
Production
Possibility Curve
Production
Possibility Curve can have termed as different combination of goods/services that
can be produced by switching resources between this good/ service.
4th
Concept
Diminishing
Marginal Utility
As a person
consumes increased amount of a good/service marginal utility achieved from
consumption of additional unit gets reduced.
5Th
Concept
Substitution
Effect
It can be
defined as a presence of any other good/service which can substitute the good/service,
currently in use. Degree of substitutability of any good has effect on it’s
pricing.
