Economies and Diseconomies of Scale CFA Level 1

economy of scale  The left-hand portion of the long-run average cost curve, where it is downward-sloping from output levels Q1 to Q2 to Q3, illustrates the case of economies of Economies of scale can be defined as: 'the reduction in average costs of production that occur as a business increases its scale of production' Costs in the

The two concepts economies of scale and economies of size describe what happens to production or costs when the size of the firm changes Economies of scale serve as a potent tool for firms to gain cost advantages and expand their market presence The benefits include reduced per-

Economies of Scale These occur when mass producing a good results in lower average cost Average costs fall per unit External economies of scale External economies of scale result from external factors outside the company's control, such as the industry,