Economies of Scale

economies of scale  Quick Reference Reductions in the average cost of production, and hence in the unit costs, when output is increased If the average costs of production rise For example, if the fixed cost to operate in the automotive industry is $100,000, then producing 100 cars instead of 5 cars represents a lower fixed cost per

Diseconomies of scale occur when the cost per unit increases with an increase in the quantity produced This means that any attempt by a firm to increase its The company's economies of scale are derived from a unique ability to buy its merchandise in bulk, usually at significant discounts To do

Technical: the efficiency gains when a firm increases the scale of its operation yields lower costs per unit For example, buying a bigger factory will cost you Economies of scale is a cost advantage that arises with the increased output of a product Economies of scale arise owing to the inverse relationship