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 

Answered by Economics tutor

1783 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Why have inequalities increased in recent years?


Evaluate the case for the introduction of subsidies for agricultural produce. (15 marks)


Explain what is meant by the term ‘negative externality’ and explain how excessive consumption of alcohol leads to negative externalities.


What is a budget deficit?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning