Economies of Scale Examples
Communication is efficient and effective. Some production processes require high fixed costs eg. External Economies And External Diseconomies Of Scale Economy How To Run Longer Scale Cost leadership examples 1. . This diagram shows that as firms increase output from Q1 to Q2 average costs fall from P1 to P2. For instance a firm may hold a patent over a mass production machine which allows it to lower its average cost of production more than other firms in the industry. Therefore they enjoy the benefit of reduced average cost Average Cost Average cost refers to the per-unit cost of production calculated by dividing the total production cost by the total number of units produced. While economies of scale refer to a companys expenses returns to scale represent the link across inputs and outputs in a long-run factor of output. Economist Adam Smith identified the division of labor and specialization as the two key means to achi