Economics Short Run Vs Long Run Costs Questions
Economies of scale in the long run refer to the cost advantages that a firm can achieve as it increases its scale of production over time. This means that as a firm expands its operations and increases its output, it can benefit from lower average costs per unit of production. This is primarily due to spreading fixed costs over a larger output, which leads to increased efficiency and productivity. Additionally, economies of scale can also result from bulk purchasing, specialization of labor, and technological advancements. Overall, economies of scale in the long run allow firms to achieve cost savings and potentially increase profitability.