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

1837 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is elasticity of demand and how do you work it out?


Explain the 'Economic Problem' and how this closely links to the principles of demand and supply and how this ultimately determines the price of goods.


'Is Globalisation beneficial for all parties?'


Explain how price and output are determined for a firm in a monopolistically competitive market, in both the short run and the long run


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