Economics Supply And Demand Questions
Economies of scale refer to the cost advantages that a company or industry can achieve when it increases its production output. As production volume increases, the average cost per unit decreases, leading to lower production costs and increased efficiency. This can be attributed to factors such as spreading fixed costs over a larger output, improved specialization and division of labor, bulk purchasing discounts, and increased bargaining power with suppliers. Economies of scale allow businesses to achieve higher profit margins and maintain a competitive advantage in the market.