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

1958 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is consumer and producer surplus?


An economy has 3 leakages from the circular flow. The marginal propensity to save = 0.17, the marginal propensity to import = 0.23 and the marginal tax rate = 0.4. The government rises spending by £300 million, what is the final change in national income?


What is meant by an oligopoly being both interdependent and uncertain in their price strategies?


What is the Aggregate Demand in an economy?


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:

© 2026 by IXL Learning