What is Marginal Products, Marginal Cost and their Differences between them; Economic of Scales and Factors that Causes the raise of the Economic of Scale

                   All praise is due to Allah, may peace, salutation and the blessing be upon the prophet Muhammad (ﷺ), his entire family, his companions and those that follow their footsteps with righteous until the last day. Indeed knowing your marginal product and Marginal cost of any business activity has helped a lot of businesses throughout the globe for the development of the business, long life sustainability and growth. it is very significant for all business owners to comprehend provided that the marginal product continues to raise the more profitable the operation of the business.

              Before going furthermore, I will like to first and foremost what talk about marginal products..? This is the extracting unit of output production produce due to the additional more unit per unit of input. Less take this example Smart production technology (Section A). Produces eighteen (18) new products with an additional and (Section B) produces thirty-five (35) new products. Moreover, from above the example, we learn that marginal products are twelve (12) extract units of new the product that is received; that is different between the two sections A and B. Besides, as a manager will also want to know the marginal products so that he or she can have the chance to maximize its total product to achieve this you must know how to add each additional unit of input which indeed affect the marginal product leading to the contribution of the total unit of product. Furthermore, it is very significant for all business owners to comprehend provided that the marginal product continues to raise the more profitable the operation of the business.

              Secondly what is a Marginal Cost…? This is the incremental cost per unit, which implies the cost of producing one extract unit of the goods. Instinctively, marginal cost at any level of production contains the cost of extract inputs required to produce the next units. In other marginal cost is the additional cost sustained during the production of the extracting unit of output. Moreover, the formulae are differences in the total cost and divide it via different in the product output; marginal cost is defined as the rate at which total cost of the products yield the production raises per unit. As a result, the marginal cost can be only influenced via variable cost but not the fixed cost. Example, Jaw’s manufacturing company limited have manufactured a heating system, the factory has outdated existing equipment to maintain the company production level. Example of marginal Cost in our businesses and other factories throughout the world.

MARGINAL COST
Quantity	Total Cost	Marginal Cost
0	150	0
5	250	175
10	350	165
15	450	155
20	550	145
25	650	135
30	750	112
35	850	295
40	950	385
45	105	465
50	1150	555
55	1250	985

From the above example, you can observe that:

1.      As the total cost raises the number of quantity of the product also raises. For the reason that the larger quantities of factor production are required.

2.       As the Marginal Cost keep reducing it comes up to quantity (Q=30) and stop, from there it keeps growing continuously.

3.      The marginal cost of producing an extra unit of heating the system at each level of production. Moreover, Extract unit has been taken into account of this an unexpected increase in regards to the raw material; if the firm has changed its contractors, as a result of the marginal cost.

DIFFERENT BETWEEN MARGINAL PRODUCT AND MARGINAL COST
MARGINAL PRODUCT	MARGINAL COST
1. Extract output generated per unit of additional input.	1. The total cost to produce per extra unit of product or output.
2. As marginal product increases	2. Marginal Cost decreases
3.

Economic of Scale

               The scope of economies of scale lower the cost per unit as the quantity of the total of the same output is achieved or produced; the scope of economic of scale lowered the cost per unit, as the range of the products, produced raises. Less take the example of a fast-food restaurant where all the breakfast, lunch and dinner are prepared the seating and kitchen equipment are been spread overs higher meals served to decrease the overall cost per meal. As well as petrol station must have service attention and office block can lower the cost per unit via providing convenience store items such as biscuit, snacks and various kind of drinks. Meanwhile providing these products are interdependent, providing both of the product lower the cost per unit.

FACTORS THAT CAUSES THE ECONOMIC SCALE TO RAISE

1.      The Specialization

2.      The Efficient Capital

3.      The Negotiation Power

4.      The Learning

               Firstly Specialization, when the large scale of the resource is employed and employ a large number of workers. Therefore this permits the companies to practices specialization splitting the job into departments with a specific task assigned in order to separate the employees. As a result, all the employees will devout to the area they must acquaint or the part they know best which permit them to perfect their talents and skills. Furthermore, above all what has been stated that the average unit is achieved at a lesser cost and the administrative level.

              Secondly Efficient Capital, the most efficient capital equipment and machine are based their cutting edge technology with high productive capacity; the companies with the huge scale of production can be able to meet the expense of equipment and in return gain their full capital. Moreover, full utilization of equipment or machinery achieved a lower cost per unit of production.

               Thirdly Negotiation Power, the larger the companies the greater the area of the power of negotiation and output with parties that is financial institutions labour unions and government. Moreover, larger companies obtain a better discount when purchasing the material for their production via bulk purchasing. As a result, people are eager to be employed in larger companies for that being the case the large companies even negotiate the lower Cost wage because people want to be employed by the larger companies. Furthermore, financial institutions especially banks are more willing to offer loans at lesser interest cost rate to well-established companies having hug scale of production.

               Fourthly learning, as the companies grow, the company both from their experience and research; the small scale companies with insufficient structure and processes, as a result, they learn via doing and they become more and more efficient day by day. Moreover, companies learn from their research while large companies can afford the high research cost resulting via the better processes and new formulas pushing their cost per unit of production lower.

              In conclusion, the marginal product and marginal has indeed paid a very significant role in the production in a lot of firms or companies regards to the input and output of the production control and increasing for the development of the company products. Moreover, the economic scale of factor also determines how the company can improve its performance and achieve their expectation using the specialization, efficient capital, negotiation of power and learning.

Bibliography

Celli, M. (2013). Determinants of Economies of Scale in Large Businesses—A Survey on UE Listed Firms. Businesses—A Survey on UE Listed Firms, 1-7.

Sabariah Sulaiman, Hairuddin Mohammad, Siti Khalijah Yaman Riduan Yunusa. (2019). FACTORS OF ECONOMIES OF SCALE FOR CONSTRUCTION CONTRACTORS. Vistana Hotel, Kuala Lumpur, Malaysia: International Congress on Technology, Engineering, and Science (IConTES 2016.

XPLAND. (2018, January 29). Retrieved from Economies of Scale: https://xplaind.com/580682/economies-of-scale