Why are there two plants run by one firm that produce large commercial aircraft and thousands of plants run by hundreds of firms that produce ready-mix concrete? Explain in terms of economies of scale

Question

Please provide the best answer for the statement.

Answer 1

The two industries differ. The manufacturing of large commercial aircraft requires a great deal of resources and specialization (workers, equipment, and technical expertise) to begin production and as production expands, economies of scale can be achieved because the high fixed cost can be spread over more aircraft units. Only one or two plants, however, are sufficient to produce all the large commercial aircraft that are wanted domestically or worldwide in any year. In the case of ready-mix concrete, plants tend to be smaller because there is less need for specialization or unique resources or technology, and the fixed costs of production are lower. As output expands, concrete firms quickly exhaust their economies of scale because the market for concrete is limited within geographic areas and transport costs rise as concrete is shipped greater distances. Minimum efficient scale is achieved sooner in concrete production than in large commercial aircraft production.