BUSINESS ECONOMICS

Topics : Economies and Diseconomies of scale ,

types of unemployment and full employment

BY: Madhav raj Kashyap

Louis Raja Goyary
Manthan Digra
Manash pratim Baruah
SUBMITTED TO : Mehzobin Hazarika
Keshab Gautam

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 Introduction.
• Economies: An economy is a system of inter-related production and
consumption activities that ultimately determine the allocation of
resources within a group. The production and consumption of goods
and services as a whole fulfill the needs of those living and operating
within it.
• Each economy functions based on a unique set of conditions and
assumptions. Economic systems can be categorized into four main
types: traditional economies, command economies, mixed
economies, and market economies.

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• Diseconomies of scale: Diseconomies of scale occur when a
company or organization grows too large, leading to increased per-unit
costs or decreased efficiency. This happens as the firm expands beyond
its optimal size, causing issues like communication breakdowns,
bureaucratic complexities, coordination problems, or difficulties in
managing larger operations, which ultimately raise costs rather than
reducing them.

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• Unemployment : unemployment refers to the situation where individuals
who are willing and able to work are unable to find jobs despite actively
seeking employment. It’s a measure of the percentage of the labour force
that is without a job but is actively looking for work.
• There are several types of unemployment:
• 1) open unemployment.
• 2)Frictional unemployment.
• 3)Structural unemployment.
• 4)Cyclical unemployment.
• 5) Seasonal unemployment.
• 6)underemployment.
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• Full employment . Full employment signifies a situation in an
economy where nearly all eligible and willing individuals who are
seeking employment can secure jobs. It doesn’t imply 100%
employment, as some level of natural unemployment persists due to
factors like job transitions, skill mismatches, and seasonal variations.
The economy operates at its maximum potential output without causing
high inflation or detrimental effects on the labour market.
• Two types of full employment.
• 1.Classical or Ideal Full Employment.
• 2)Practical Full Employment.
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WHAT IS ECONOMIES OF SCALE ?

Economies of scale are cost advantages

reaped by companies when production
becomes efficient. Companies can
achieve economies of scale by increasing
production and lowering costs

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EFFECT OF ECONOMIES OF SCALE

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TYPES OF ECONOMIES OF SCALE

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TYPES OF INTERNAL ECONOMIES
OF SCALE

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TYPES OF EXTERNAL ECONOMIES OF
SCALE

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ECONOMIES OF SCALE

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 WHAT IS DISECONOMIES OF SCALE ?

Diseconomies of scale happen when a

company or business grows so large that the
costs per unit increase. It takes place when
economies of scale no longer function for a
firm.
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TYPES OF DISECONOMIES OF SCALE

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TYPES OF INTERNAL DISECONOMIES OF
SCALE

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TYPES OF EXTERNAL DISECONOMIES
OF SCALE

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 WHAT IS UNEMPLOYMENT ?
 Unemployment is a condition in which skilled
and abled individuals do not get gainful jobs
at a decent wage.
Unemployment occurs when workers who
want to work are unable to find jobs

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 TYPES OF UNEMPLOYMENT

Open Unemployment
It refers to that economic phenomenon in which
persons are able and willing to work at the prevailing
wage rate , but fail to get work.

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  Disguised Unemployment
It is a situation where the number of workers
engaged in a work is more than actually required.
For example , if two workers are needed on a piece
of land and five are engaged on the same job ,then
three workers are disguised unemployed.
 Seasonal Unemployment
It occurs at certain seasons of the year. It occurs in rural
areas.
For Example- In the agricultural sector where the
demand for workers is more during harvesting
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 Industrial Unemployment
This is the most commonly observed type of urban
Employment due to an increasing rate of migration of
workers from rural to urban areas.
 Technological Unemployment
Rapid advancement in technology is leading to
Unemployment of individuals who fail to match or adapt
to required skills and, thus, become obsolete for the
industry. This is mostly seen in employees belonging to
the retiring age group

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 Structural Unemployment Structural Unemployment
arises when an educated individual fails to find a job
matching their qualifications. This occurs due to a lack of
adequate job opportunities in concerned fields compared
to the number of learned individuals.

 Example: A clothing manufacturing factory purchases

specialized equipment to enhance the production
assembly process

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 WHAT IS FULL EMPLOYMENT ?

Full employment refers to a situation in which all those

people, who are willing and able to work at the existing
wage rate, get work without any undue difficulty. It also
refers to employment of all the other available
resources and factors of production for the production of
optimum output.

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 Types of Full
 Classical or Idealemployment
Full Employment: This refers to a
theoretical concept where all individuals who are willing and able
to work have jobs at market wage rates. It assumes no cyclical or
demand-deficient unemployment, only frictional and structural
unemployment exist.
 Practical Full Employment: This acknowledges the
existence of some level of unavoidable unemployment due to
factors like friction, structural issues, and the natural rate of
unemployment. In this context, full employment is achieved
when the economy operates at its potential output level
without excessive inflation, even if a small percentage of
unemployment exists.
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 CONCLUSION
Economies of scale illustrate the benefits of increased production, showcasing
cost advantages due to spreading fixed costs over a larger output. However,
reaching a point where further expansion leads to diseconomies highlights the
complexity of scaling. Diseconomies can emerge from inefficiencies in
management, communication, or logistics, resulting in increased per-unit costs.

When discussing unemployment, the spectrum includes Structural

unemployment arises from mismatches between available jobs and the skills of
the workforce, often requiring retraining or educational shifts. Seasonal
unemployment occurs in sectors heavily influenced by seasonal variations,
where jobs are only available at certain times of the year. Open unemployment
is a type of unemployment that occurs due to a lack of opportunity. Furthermore,
in this unemployment people can work however they do not get an opportunity
to work.
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Full employment the situation where all people who are available and
searching for work can find a job at the prevailing remuneration rates and
conditions.