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

1712 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Why do markets fail?


What would happen to the price and quantity of a good if the government imposed a subsidy?


On a Production Possibility Frontier diagram, indicate a point where resources are efficiently allocated (label X) and an inefficient one (labelled Y). Explain why X is efficient, why Y is inefficient and how output could be increased from both.


What is price elastic demand?


We're here to help

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

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences