LAND UTILIZATION Land is a scarce resource, whose supply is fixed for all practical purposes. At the same time, the demand for land for various competing purposes is continuously increasing with the increase in human population and economic growth.Land use pattern at any given time is determined by several factors including size of human and livestock population, the demand pattern, the technology in use, the cultural traditions, the location and capability of land, institutional factors like ownership pattern and rights scale regulation. Major Types of Land Utilization in India : As in all other countries, land in India is put to various uses. The utilization of land depends upon physical factors like topography, soil and climate as well as upon human factors such as the density of population, duration of occupation of the area,land tenure and technical levels of the people.There are spatial and temporal difference in land utilization due to the continued interplay of phys...
Internal economies
Those economies where a firm increases its scale of production,the reduced costs or economies which this firms gets as a result are internal economies.
It means increasing returns to scale. These are the result of increased division of labour or use of improved production methods . The benefits of these economies is recieved by a firm according to its organisational efficiency.
Factors for internal economies.
1) Technical economies : Technical factors also affect the returns to scale. Bigger firms are able to install suitable machinery and as a result they have lower costs of production because these industries make full capacity use of those machinery.
a) When a firm increases its scale of production , it's average cost of production falls simply because of larger volume of production.
b)A large firm increases its scale of production, it is enabled to link its production processes from the use of raw material to marketing of its finished goods.
2) Managerial economies :With the increase in scale of production a firm can benefit by specialising its managerial departments. Experts under this category can able to reduce the costs of production under their supervision.
3)Labour economics :A large firm employs large number of workers. Each worker is given kind of job ,he is fit for. Workers get skilled in their operations which saves production time on the one hand and encourage new ideas on the other. All this leads to falling cost with increased scale .
4)Marketing economies: As the scale of firm is increased , it obtains economies of purchase and sale since firm purchases on large scale, it gets all inputs at cheaper rate.
5)Financial economies: A bigger firm is better known to financial institutions and the stock market. The charges of selling bonds and shares or of borrowing direct from the market are much less than those demanded from smaller firms .
External economies
Those economies that include all those cost reducing benefits or facilities which accrue to a firm when size of industry in which firm is working increases.
These are the results from the progess an industry makes in providing social overhead capital needed by firms. Use of banking, credit , advantages of localisation, insurance, opening common school for labour etc are the factors which benefit the firm and reduce their costs of production.
Sources of external economies
1)Physical factors :As the size of an industry expands some physical factors may work to reduce the costs of all the firms working in the industry.
For instance, let's say firms are working in an area of coal mining. As they mine coal , they have to pump water out of coal mines which seeks from the side of the mines . Now, if the number of firms, mining coal in the area increases, the cost of pumping out water of each firm shall go down because the share of seeping water need pumping out for each firm shall be less than before.
2) Economies of concentration : When the firms in an industry are established at the same place then all these firms get some common benefit like development of means of transport and communication, availability of specialised labour etc.
3) Economies of information :As the firms in an industry expands, possibilities of many collective and cooperative ventures can be realised. For example , the publication of newspapers and journals giving scientific and commercial information about industry becomes possible . Likewise, information collection from the firms in industry is also made easier.
4)Economies of disintegration :As a firm develops the firms working in it are more agreeable to splitting of processes of manufacture and handing over each process to different firms. The separation of different stages of production of a commodity with a view to reducing cost is of two types :
a)Horizontal disintegration which takes place when every firm tries to specialise in one particular item in a line of production rather than producing variety of items.
b) Vertical disintegration is defined by the separation of process of cotton refining, spinning and weaving of cloth.
Both vertical and horizontal disintegration reduce costs for member firms in an industry by reducing duplication, saving time and materials .
Types of external economies
a)Reversible and irreversible external economies
-Reversible external economies are those which expand with the expansion of industry and contract with the contraction of industry.These are static in nature.
-Irreversible external economies are those which are not linked to the size of an industry.These are dynamic in nature.
b)Real and pecuniary external economies
-Real external economies are those which reduce real cost of production through technological influences on the output of a firm from expanding outputs of other firms.
-Pecuniary external economies are the results of scale economies in the another industry. These industries reflect an interdependence among producer's which is transmitted through the price system. These are non - Technical in nature.
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