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Advantages of Population Growth

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Submitted By ingridw
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Population growth in Australia

Executive Summary
According to Treasury's most recent Intergenerational Report, Australia's population should climb from 22.7 to 36 million by 2050 due to a combination of a fairly high birth rate by western standards and significant levels of immigration. (ABC, 2011) Prime Minister Julia Gillard seems to be supportive of this rapidly growing population, as she stated in a recent press conference that ‘population growth is crucial for the economic welfare of our nation’. Economic welfare broadly refers to the level of prosperity and living standards of an individual or group of persons, and Julia Gillard’s statement is very valid in that Australia does heavily rely on an increasing population for economic welfare, in order to maximise the economic welfare of individual’s society. Population growth can introduce numerous benefits in the form of economies of scale, economic growth and a good dependency ratio, and these arguments will be discussed further in order to prove the validity of Julia Gillard’s statement.

Economies of scale
Economies of scale are the benefits to a firm (decreasing average costs of production) as the firm increases in size. Population growth permits the development of economies of scale for Australian firms because with more people there is more labour for production and more money to spend on production, increasing the quantity produced. This means that the unit cost of production decreases, resulting in more revenue and possible higher market share for businesses. (ABS, 2007) Now firms are able to supply products at a more affordable price, stimulating the cycle again as consumers will buy more. Furthermore, it is easier to progress when the production capacity is increased as opposed to the capacity being replaced. Thus, a growth in production contributes to productivity gains through economies of

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