5

5.4 Module Review Questions

1. Provide and discuss some examples of economies and diseconomies of scale in a college environment.
As the college gets bigger and has more students it can also increase class sizes and offer a bigger range of courses, thus decreasing salaries as a percentage of its total revenue. Economies of scale are achieved when the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases. A possible diseconomies of scale is that the college demands more staff than the local area it is in can provide, so it has to pay people to move house to work at the college, increasing costs. Diseconomies of scale occur when the average unit cost of the good or service begins to increase as the capacity and/or volume of throughput increases.
2. Discuss some forecasting issues that you encounter in your daily life. How do you make your forecasts?
Forecasting is the process of projecting the values of one or more variables into the future and this happens every day. Some forecasting issues in my life at work are to avoid scheduling conflicts let’s say between training and meetings. I try to project out schedules and keep some as flexible as I can.
3. Provide some examples of time series that exhibit a) trends; b) seasonal patterns; and c) cyclical patterns.
The best example of a time series that exhibits trends, seasonal patterns, and cyclical patters would be the stock market. For example, the daily closing of the Dow Jones stock market fits the bill for all three. Another example would be gun sales normally near election season there always seem to show an increase in sales. If a certain trend of firearms is popular we will see an increase in sales; when congress or the President talk about gun control there will be increases in sales.