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What causes economies of scale?

In: Economics, Manufacturing [Edit categories]

Answer:

Economies of scale are the money firm could save, when it expands itself. For example, if firm's average cost per 1 unit is 10 at the output of 100 unit and when it expands its output to 200 unit, the average cost per 1 unit drops to 8, then the firm enjoys economies of scale. So they occur, when a percentage increases equally in all inputs leads to a greater percentage change in output. Inputs are land, labour and capital and output are the goods and services the firm produces

First answer by Jangg0t. Last edit by Jangg0t. Contributor trust: 336 [recommend contributor ]. Question popularity: 3 [recommend question].

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