SCALE OF PRODUCTIONITS MERITS AND DEMERITS

(MICRO ECONOMICS)Presented by

Group # 3(BBA Hons.I)Seetal Daas(Leader)

Bhawan KumarShoaib SalmanZahid HussainHaresh Kumar

Scale of Production

Definition: Scale of Production is set by the size of

plant, the number of plants installed and technique of production adopted by producer.

Example:Mills,Factories etc.

Classification/Types

The Scale of production is classified as under;

(1)Small Scale Production

(2)Large Scale Production

(1)Small Scale Production

Definition: If a firm produces goods with

small sized plants, the scale of production is said to be small scale production. Small scale is associated with low capital output and capital labor ratios.

Example: Handicrafts, House Jobs, Flour Chaki,

Bakers, Tailor’s Shop etc.

(2)Large Scale Production

Definition:If firm uses more capital and

larger quantities of other factors and produce more goods/products, it is said to be large Scale production.

Example: Steel Mills, Sugar Mills, Agricultural Industries,

Textile Industries, Film Industries, Cement Factories, Motor Industries etc.

Merits of Small Scale Production

Close Supervision Nature of Demand More Employment Need of small Capital Direct relation b/w Workers and

Employers Easy Management Freedom of Work

Demerits of Small Scale Production

High Cost of Production Less use of Machines Difficulty in getting Loans Difficulty to face Economic Crisis Costly Raw Materials Lack of Standardized Goods Old Techniques Difficult to face competition with Large

Scale Producers

Merits of Large Scale Production

Division of Labor Use of machines More production Cheap and Easy Loans Standard Goods Research Economy of Buying and Selling

Demerits of Large Scale Production

Evils of Factory System Danger of Over-Production Less Supervision Class Struggle Dependence on Foreign Market Unequal Distribution of Wealth