Asked by Jamie Walker on Jun 15, 2024
Verified
What is economies of scale? How can a firm achieve economies of scale?
Economies of Scale
Businesses achieve cost savings from their large scale of operations, as the cost per unit produced decreases when the scale increases.
- Develop an understanding of the concept of economies of scale and how it plays a role in the reduction of production costs.
- Explain the tactics organizations can implement to secure economies of scale.
Verified Answer
AC
Alivia CroteauJun 20, 2024
Final Answer :
Economies of scale exist when each 1 percent increase in production volume results in an increase of less than 1 percent in the total cost of production.Each new unit,therefore,is less expensive to produce than the previous one.Firms are able to achieve economies of scale through cost spreading,purchasing power,specialization of labor,and specialization of technology.
Learning Objectives
- Develop an understanding of the concept of economies of scale and how it plays a role in the reduction of production costs.
- Explain the tactics organizations can implement to secure economies of scale.
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