How to determine economies of scale?

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Expert Solution

When more units of goods and services are produced in a large scale, with lesser input costs, economies of scale are said to be achieved.
As company grows and increases its production units, a company will have a good chance to decrease its cost.
Economies of scale is determined by dividing the percentage change in cost with percentage change in output.
Economies of scale occurs when increase in output results in decrease in unit costs with input costs remaining same.
Two types of economies of scale are: internal and external.
Economies of scale refers to the cost advantage achieved by a firm when it increases its output.
Economic growth is experienced when economies of scale are realized.
Division of labor and specialization are two key means to achieve a greater return on production.
With such efficiency, time and money can be saved while production level increases.
As there are economies of scale, diseconomies of scale also exists.

ekkarill92 answered 1 year ago

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