This document discusses the history and evolution of factories from the late 1700s to the future. It traces key developments like the rise of steam power in the late 1800s, Ford's assembly line in the early 1900s, the introduction of computers in the 1950s-60s, and how robots were incorporated into production in the 1970s. The document also examines why factories were useful by allowing for greater specialization and efficiency but could risk boring work. Additional sections cover starting a business, raising money, production basics, and the economic concept of diminishing marginal returns.

1. The theory of the firm
Industrial Organization

2. Factory Timeline
Late 1700s
Factories
England
Late 1800s
Steam Power
Power Looms
1946
Computers
1950-60
Deming
Six Sigma
Quality
1970s
Robots in
production
Japan
Cottage
Industry
Early 1900s
Ford & mass
production
1910s
Scientific
Management
Taylorism
Future:
On-demand
3-D printing

3. Why Factories
Greater production
Specialization
Decreased downtime and transition time
Spark innovation
Machinery that allow workers to be more efficient
Risk of boredom, mind-numbing
Modern Times

4. Starting a business
What: Consider needs, trends, innovation
Where: Market:
o large & general or small & specialized
o Location: materials & labor availability, transportation,
infrastructure
How:
Balance of inputs:
Capital or Labor
Infrastructure

5. Raising Money
Savings/cash
Lost interest earned
Keep Control
Loans
Interest paid, Collateral
More spending flexibility
Investors
Ownership stake, Profit shared
Advice, Shared success
Kickstarter

6. Production basics
Short Run Long Run
Factory size fixed
No entry or exit of firms
Firms can somewhat vary
their production including
producing at 0 or hiring
more workers or adding
overtime
Factory size can change
Firms can enter or exit in
response to profits or
losses

7. Firms in the short-run
Fixed inputs: Factory size and technology
Variable Inputs: Labor and Materials
 What happens as try to increase output?

8. Law of Diminishing Marginal
Returns
As more & more of a variable input is added to a fixed
input the productivity of the variable input diminishes.

9. What about in the long run?
In the long runANYTHINGAND EVERYTHING can change
Can get a bigger or smaller factory
Can try new technology
What does this mean for the Law of Diminishing Marginal Returns?

10. Why bigger can mean cheaper

11. Why too big means more expensive

12. Check-in
Name ____________
The Law of Diminishing Marginal Returns is when:
__________________________________
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