services-actually operate. Incorporation of modifications in the conventional theory then provides a more workable base for studies of cost and efficiency.
An assignment made in terms of "Challenges and Opportunities in the Decade | Ahead" is a clear invitation for the speaker to reveal his particular biases and value judgments--an invitation that I will accept in due time.But before depending solely on my own judgments, it may be wise to consider the present Scope of the field and to share with others the opportunity to voice opinions 4S to desirable changes in major emphases, Thus, we can start with the objec-
p ERHAPS as never before, the public imagination today is captured by the idea of planning--planning for postwar industrial developments, for the settlement of new lands, for the rehabilitation of devastated areas, for the rebuilding of cities and the clearing of slums, for public and private works of all types.It seems appropriate to inject into this situation some discussion of that most useful planning tool--the concept of economies of scale. The concept itself is too familiar to require extensive presentation. Briefly, the economy of scale curve tells us the levels of costs that may be expected from the operations of plants of various sizes, when operations are organized as e2Tciently as possible under the given conditions. 2 More technically, the economy of scale curve represents the locus of the lowest average costs that may be achieved with variations in the scale of operation. As the scale is increased, economies will usually be present and will lead to reduced costs, but these will eventually be replaced by dis-economies and increasing unit costs.The relationship between cost curves for individual plants and the curve representing economies of scale is shown in Figure 1.3 Average short-run curves for several plants have been shown in the conventional form, first decreasing with the spreading of fixed or overhead costs but finally increasing as a result of diminishing returns as more of the variable factors are combined with the fixed factors. These may be thought of as the curves characteristic of the
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