Describe what is economies of scale?

So economies of scale is an economic theory which explains why large firms tend to have cheaper per unit costs than smaller companies. The theory basis its ideas around a few key issues. There are many ways to achieve economies of scale. The definition is when unit costs fall as output rises. Below are a few examples how companies can achieve economies of scale. Technical economies of scale is when Large-scale businesses can afford to invest in expensive and specialist capital machinery. This will increade output without increasing unit costs as much hence in the long run achieving economies of scale.

Answered by Hassan U. Economics tutor

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