The reason for this is that a single firm go away be able to provide the good more cheaply due to the existence of economies of scale which is when organization has emergence in scale of merchandise which will lead to a lower cost of unit of output. For example an organisation business leader be able to purchase resources or raw hooey more cheaply by buying in pot since suppliers will get larger demand for their stock, also the organisation can borrow money more cheaply in larger amounts.
In the case of a rail web, the busy advantage enjoyed by a large single supplier is in the spreading of both the enormous fixed cost involved in constructing the meshwork, and the constant on-going costs of maintaining the integrity of the network over time. So for example if it cost £cc zillion to lay and maintain a rail network to service the entire community for 20 familys. The demand for journeys for those 20 years will be average of about 2 billion journeys per year; 40 billion in all.
SO to recover the cost for maintaining and constructing the rail line the average cost per journey is £10
Now if there are two competing networks, each incurring a cost of £200 billion. If they are equally successful in attracting customers, they will service 20 billion journeys each in the next 20 years. The average price of a journey on network A and network B will have to be set at £20 to re-cover costs over the 20 year period.
In the case of the UKs rail network the more journeys that occur the lower the average cost of production will be, as the fixed costs of building the network, signalling and move are spread over a larger number of journeys. In this market,...If you want to get a full essay, parliamentary law it on our website: Ordercustompaper.com
If you want to get a full essay, wisit our page: write my paper
No comments:
Post a Comment