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28 Jul 2019
Suppose you are the general manager of a concrete mixing and delivery facility located in
Lexington. Your firm buys the raw materials for concrete (i.e., sand, gravel, and cement),
mixes the concrete according to customer specifications, and delivers the concrete to the job
sites (including residential, industrial, and road construction sites). Your cost accountant
has observed that the real (inflation adjusted) average cost of production has declined as
your business has grown, so your business may exhibit economies of scale. You confirm this
observation with a market analyst who studies the construction industry. What implications
does this feature of your cost structure have for the way you manage the business?
Suppose you are the general manager of a concrete mixing and delivery facility located in
Lexington. Your firm buys the raw materials for concrete (i.e., sand, gravel, and cement),
mixes the concrete according to customer specifications, and delivers the concrete to the job
sites (including residential, industrial, and road construction sites). Your cost accountant
has observed that the real (inflation adjusted) average cost of production has declined as
your business has grown, so your business may exhibit economies of scale. You confirm this
observation with a market analyst who studies the construction industry. What implications
does this feature of your cost structure have for the way you manage the business?
Sixta KovacekLv2
29 Jul 2019
