What are economies of scale?

Economies of scale are when increasing output leads to lower long-run average costs- meaning that when a business increases production, their average costs decrease
There are several types of economy of scale: Risk bearing, Managerial, Financial, Purchasing, Technical, Marketing 
For example, purchasing economies of scale are likely to occur as when a company is grows, their market share increases, and are therefore more able to negotiate prices with their suppliers, meaning that average costs would fall 

Related Economics A Level answers

All answers ▸

Discuss the view that falling unemployment will inevitably lead to trade-offs with other macroeconomic policy objectives


How does the law of diminishing marginal utility affect the demand for a Veblen good?


What are the effects of a price floor?


What is supernormal profit?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences