ECONOMICS SS1 SECOND TERM LESSON NOTE
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ECONOMICS SS1 SECOND TERM LESSON NOTE
INTERNAL DISECONOMIES
Internal diseconomies on the other hand can be defined as the disadvantages which a firm undergoes as a result of expansion, resulting in less efficiency and increase in the cost per unit of output as a result of managerial problems.
DISADVANTAGES OF LARGE SCALE PRODUCTION
a. Delay in decision making: As a firm grows in size, decision making process will take longer time.
b. Less personnel relationship between workers and management: As a firm grows in size the rapport and interaction that exists when it was small is no more present.
c. Difficulties In co-ordination and control of staff: When a firm grows in size, it might be very difficult to co-ordinate and control the staffs.
d. Over production and Resource Wastage: One major disadvantage of large scale production is the fact that resources can be wasted in production. This is because goods can be overproduced.
e. Large firms take a long time to change their methods of production or to respond to changes in the market. Time is usually wasted before final decisions are reached.
EXTERNAL ECONOMIES
External economies are cost saving advantages which can be enjoyed only by the firms in the same industry. They are benefits due to localization of industry. In other words, External economies are the advantages a firm derives from increase in its output and decrease in costs due to helps the firm receives from other firms especially in the use of their products.
CLASSIFICATION OF EXTERNAL ECONOMIES SCALE
1. Economies of by-products
2. Technical economies
3. Finance economies
4. Infrastructural economies
5. Research economies
ECONOMICS SS1 SECOND TERM LESSON NOTE
External Diseconomies
External diseconomies on the other hand are the increased costs a firm will experience as a result of increasing its output resulting from external effects.
Questions
1. What do you understand by economies of scale:
2. Explain types of economies of scale
3. Write short notes on
a. Small scale production
b. Medium scale production
c. Large scale production.
4.Explain the internal economic of scale.
WEEK 4: DEFINITION OF FIRM, PLANT AND INDUSTRY FIRM.
FIRM
The firm is an independently administered business unit carrying out production, construction, or distribution activities. Examples of firm in Nigeria are Dangote cement, Cadbury Nigeria Plc.
PLANT
This is the same as the factory. It consists of the tools, equipment, machines and buildings of a business concern. It is a business establishment or the actual place where production is organized. E.g Aladja steel plant, etc.
INDUSTRY
An industry consists of a group of firms producing broadly similar commodities. Examples are the shoe industry, the transport industry, the cement industry, etc.
ECONOMICS SS1 SECOND TERM LESSON NOTE
FACTORS THAT DETERMINE THE SIZE OF A FIRM
1. Capital Available
2. Size of the market
3. Ability of the entrepreneur
4. Availability of raw material
5. Level of technology
6. Efficiency of management
7. Policy of the government
8. Nature of the product
9. Stage of development
CONCEPT OF TOTAL PRODUCT (TP), AVERAGE PRODUCT (AP) AND MARGINAL PRODUCT (MP)
1. TOTAL PRODUCT (TP): Total product refers to the total quantity of goods produced at a particular time as a result of the use of all the factors of production.
ECONOMICS SS1 SECOND TERM LESSON NOTE
Point of diminishing returns
total
output Total product
0 unit of labour
Symbolically written as TP = AP X Q
2. AVERAGE PRODUCT (AP): Average product is defined as the output per unit of the variable factor (labour or capital) employed. This is obtained by dividing the total output by the number of labour or capital employed.
ECONOMICS SS1 SECOND TERM LESSON NOTE
RELATIONSHIP BETWEENTOTAL PRODUCT, AVERAGE PRODUCT AND MARGINAL PRODUCT.
The relationship between total products, average product and marginal product can be demonstrated by a graph. Both TP and MP initially rise. The TP curve remains at maximum point when MP is zero. TP declines after MP = 0 and MP afterwards assumes negative values.
QUESTIONS
1. Write short note on (a) firm (b) plant (c) industry
Tonnes of fertilizer applied total product in bags marginal product
0 1000 …….
1 1100 100
2 1250 150
3 1500 250
4 …….. 400
5 …….. 250
6 ……. 125
7 2350 ……..
8 2380 ……..
9 2330 ……..
2. What will be the total output of maize when no fertilizer is applied to the land? (2b) Calculate the total product after the application of the following quantities of fertilizer (i) 4 tonnes (ii) 5 tonnes (iii) 6 tonnes (c) calculate the marginal product after the application of the following quantities of fertilizer (i) 7 tonnes (ii) 8 tonnes (iii) 9 tonnes.
ECONOMICS SS1 SECOND TERM LESSON NOTE
WEEK 5 BUSINESS ORAGNISATION
Business organization can be defined as an enterprise set up by an individual or group of individuals, government or its agencies for the main purpose of making profit and providing goods and services for the satisfaction of human wants.
TYPES OF BUSINESS ORGANISATIONS
a. PRIVATE ENTERPRISES: Private enterprises are the enterprises owned and managed by private individuals. The major forms of private organizations are listed; (1) sole proprietorship (2) partnership (3) private and public limited liability companies and co-operative societies (4) co-operative societies. Examples include Nestle Nigeria Plc., Cadbury Nigeria Plc.
ECONOMICS SS1 SECOND TERM LESSON NOTE
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