What is Economies of Scale? - Business Standard

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Economies of scale (ES) can be defined as a decrease in the average costs of production when there is an increase in the scale of production of a company, ... Home Markets Companies Opinion Specials Technology PF Portfolio BSSHOWS Sports India@75 Today'sPaper LatestNews Economy Finance CurrentAffairs International Management Strategist Weekend DataStories BSReads News Stocks Commodities IPOs MutualFunds MutualFundTools Derivatives BSFundManager News Results FinancialX-Ray Auto Engineering Financials Infra IT Oil&Gas Telecom Services AllSectors EditorialComment Columnists BSSpecial BusinessLaw&Tax Lunch Poll PE/VC SME B2BConnect SponsoredContent News Reviews Launches Specials News Features Investments Loans&CreditCards Tax Insurance FinancialTools CWG2022 Youarehere»Home»EconomiesofScale WHATISECONOMIESOFSCALE? EconomiesOfScale Follow Economiesofscale(ES)canbedefinedasadecreaseintheaveragecostsofproductionwhenthereisanincreaseinthescaleofproductionofacompany,itreferstoasituationwhenthenumberofproductionsurgesandthecostperunitdips.Itoccurswhenthereisareductionofcostsgivenaproportionalriseinproduction.Economiesofscaleenableafirmtosellitsproductsatmorecompetitivepricesandtocaptureaconsiderableshareofthemarket.   HowisEconomiesofScaleachieved Economiesofscalearesaidtobeachievedwhenmoreunitsofagoodorservicecanbeproducedonalargerscalewith(onaverage)fewerinputcosts.   Toputitsimply,whenafirmisabletoproduceitsoutputataminimalunitrate,reducethecostofproductionandmakeaprofitfromproducingmoreunitstoreachthetarget.Asaresult,Economiesofscalemakeacompanymoreefficient.   EconomiesofScaleexplainedwithanexample   AsmallcompanylikeXproduces100bulbsatanaveragecostofRs400perbulb.Amedium-sizedfirmlikeYproduces200bulbsatacostofRs200perbulb.Alarge-sizedfirmlikeZproduces300bulbsatacostofRs100perbulb.Economiesofscaleexistwhenthelargerscaleofproductionleadstoloweraveragecosts.Economiesofscaleprovidebigfirmswithanedgeoversmalleronesasthelargerthebusiness,theloweritsper-unitcosts.    ReadMore.. LATESTUPDATESONECONOMIESOFSCALE WEF2022:Everydollarinvestedinsocialjobstoyield$2.3return JobsintheUSinclude4.2millionteachingjobs,1.8millioninpersonalcareandserviceworkers,and900,000jobsin...|May26,2022,Thursday × Youarenowfollowing"EconomiesofScale". Youwillreceivealltheupdatesonthisaboutpageinyourmailbox. YoucanbettermanagenewsalertsandUnfollowthisaboutpageonthe yourManageMyAccountpage. Thisservicerequiresyoutoregisteronthewebsite. RegistrationisFreeandsimple. Login Register



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