Discussion on Economies of Scale

The discussion post should be for both questions 1 and 2 and should be a minimum of 300 words. Indicate at least two sources or references and should be in APA format

1. Commercial bakeries typically sell a variety of products (breads, rolls, muffins, cakes, etc.) to local grocery stores. There are substantial economies of scale in the production of each one of the bakery products, which makes it cost-effective for bakeries to specialize in the production of just one product. Grocery stores, however, prefer to buy from multiproduct bakeries that sell a full line of bakery products. How might managers organize production to take advantage of the economies of scale and scope in production and marketing that exist in the baking industry?

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2.  Ross Perot added his memorable “insight” to the debate over the North American Free Trade Agreement (NAFTA) when he warned that passage of NAFTA would create a “giant sucking sound” as U. S. employers shipped jobs to Mexico, where wages are lower than wages in the United States. As it turned out, many U. S. firms chose not to produce in Mexico despite the much lower wages there. Explain why it may not be economically efficient to move production to foreign countries, even ones with substantially lower wages.

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