Consequently, potential economies of

Discussion in 'English Only' started by DUET, Aug 1, 2014.

  1. DUET Senior Member

    Bengali
    Source:
    Official Guide to the GMAT(Graduate Management Admission Test)

    The throughput needed to maintain the optimal scale of production requires careful coordination not only of the flow of goods through the production process, but also of the flow of input from suppliers and the flow of output to wholesalers and final consumers. If throughput falls below a critical point, unit costs rise sharply and profits disappear. A manufacturer's fixed costs and "sunk costs" (original capital investment in the physical plant) do not decrease when production declines due to inadequate supplies of raw materials, problems on the factory floor, or inefficient sales networks. Consequently, potential economies of scale are based on the physical and engineering characteristics of the production facilities—that is, on tangible capital—but realized economies of scale are operational and organizational, and depend on knowledge, skills, experience, and teamwork—that is, on organized human capabilities, or intangible capital.


    Does consequently indicate that since fixed costs and sunk costs don't decrease when production declines so potential economies of scale are based on the physical and engineering characteristics of the production facilities but realized economics of scale are operational and organizational and depend on knowledge, skills, experience, and teamwork?
     
    Last edited: Aug 1, 2014
  2. perpend

    perpend Banned

    American English
    I would take out the "so" and use a comma, then I agree.

    In the original sentence, you could replace "consequently" with "as a result", if that helps.
     

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