What Is Economies Of Scale?
What Is Economies Of Scale?
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Pallavi Kamat
Economies of scale is companies enjoying cost benefits because of efficient production processes.
When production increases the fixed cost amount decreases. Also since the material that the company is purchasing for production is in bulk, that cost also can be negotiated which may lead to reduction in variable cost.
Economies of scale provide competitive advantage to organizations.
It is mostly enjoyed by large scale businesses that produce standardized products in large volumes.