Economies of scale - A reduction in long run unit costs which arise from an increase in production. Economies of scale occur when larger firms are able to lower their unit costs. This may happen for a variety of reasons. A larger firm may be able to buy in bulk, it may be able to organise production more efficiently, it may be able to raise capital cheaper and more efficiently. All of these represent economies of scale.
Plain english: The more you sell the bigger your capital to buy materials to produce your next wave.The more you sell the cheaper it cost you to produce a single unit.Popularity and competition only play a factor in balacing your production output and time frame.
Diminishing Returns - When the addition of a variable factor of production results in a fall in marginal product. Diminishing returns refers to a situation where a firm is trying to expand by using more of its variable factors, but finds that the extra output they get each time they add one gets progressively less and less. This usually arises because their capacity is limited in the short-run and the combination of the fixed and variable factors becomes less than optimal. Diminishing returns is the main reason why the short-run aggregate supply curve is upward sloping.
Let's say the physx card become soooo popular that Asus couldn't produce fast enough compared to the competition that would lead to profit loss, and Asus wouldn't be able to lower the prices of their cards as fast as the competition.
I can't see a CEO say:"Wow our product is getting popular, let's jack up the prices, that'll teach them!"
Plain english: The more you sell the bigger your capital to buy materials to produce your next wave.The more you sell the cheaper it cost you to produce a single unit.Popularity and competition only play a factor in balacing your production output and time frame.
Diminishing Returns - When the addition of a variable factor of production results in a fall in marginal product. Diminishing returns refers to a situation where a firm is trying to expand by using more of its variable factors, but finds that the extra output they get each time they add one gets progressively less and less. This usually arises because their capacity is limited in the short-run and the combination of the fixed and variable factors becomes less than optimal. Diminishing returns is the main reason why the short-run aggregate supply curve is upward sloping.
Let's say the physx card become soooo popular that Asus couldn't produce fast enough compared to the competition that would lead to profit loss, and Asus wouldn't be able to lower the prices of their cards as fast as the competition.
I can't see a CEO say:"Wow our product is getting popular, let's jack up the prices, that'll teach them!"