Economies of scale and the form of the production function;: An
economy of scale Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output The advantage arises due to the inverse relationship Economies of scale means a business has decreased cost-per-item while increasing their output Diseconomies of scale means that a company is facing increased
Economies of scale refer to the notion that average cost falls as the firm expands Conversely, diseconomies of scale occur when expansion incurs increasing Economies of scale refer to the cost advantages a company gains with the increase in production This happens because production costs can now be spread over a
Internal Economies of Scale These are those which arise from the expansion of the plant size of the firm They are specific to the individual firm These are Economies of scale occur when more units of a product or service can be produced at lower cost External economies of scale such as infrastructure improvements