Asked by Halwi Ahmed on Jun 01, 2024
Verified
What are some of the sources of cost savings for recent business start-ups in the U.S. economy such as Intel, Starbucks, Microsoft, Instagram, Amazon, and Cisco Systems?
Cost Savings
A reduction in expenses achieved by purchasing the same goods or services at lower prices, or by employing more efficient or effective operations.
Business Start-Ups
New business ventures often characterized by innovation, high risks, and the potential for significant growth.
- Understand the principle of sunk costs and their influence on decision-making in business.
Verified Answer
WN
Wan Nur Aisyah Wan SukriJun 05, 2024
Final Answer :
These firms reduce their costs by moving from higher to lower points on their short-run cost curves and by downward and to-the-right shifts of their short-run cost curves via economies of scale. A major source of lower average total costs for rapidly growing firms is the ability to spread huge product development and advertising costs over a larger number of units of output. These firms also achieve economies of scale from learning by doing and through increased specialization of labor, management, and equipment. After starting up, such firms experience declining average total costs over the years or decades that it takes them to eventually reach their minimum efficient scale (MES).
Learning Objectives
- Understand the principle of sunk costs and their influence on decision-making in business.
Related questions
Andy Wants to Maximize His Grade-Point Average ...
Possible Result of Using an Inappropriate Overhead Allocation Method ...
Which of the Following Statements Demonstrates an Understanding of the ...
Permanently Lost Resources That Often Enter Inappropriately into Subsequent Decision ...
The Manager Who Wishes to Diffuse Responsibility for a Potentially ...