Keyword Analysis & Research: economy of scale

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What are three types of economies of scale?

There are two main types of economies of scale: internal and external. Internal economies are controllable by management because they are internal to the company. External economies depend upon external factors. These factors include the industry, geographic location, or government.

What's the meaning of "economies of scale"?

Definition: Economies of Scale can be understood as the proportionate reduction in the cost achieved by increasing the scale of production or expansion in the size of the plant, often gauged by the quantity of output produced, wherein the per unit cost of output decreases with the increasing level of production.

What are the factors affecting economies of scale?

What Factors Contribute to an Economic Scale? Technology. Modern technology allows companies to automate production processes and reduce errors resulting from human labor. Efficient Capital. Capital is financial resources available to companies for expanding or improving their operations. ... Trained Labor. ... Cheaper Materials. ...

What are economies of scale please give an example?

Examples of economies of scale include: Tap Water – High fixed costs of a national network. To produce tap water, water companies had to invest in a huge network of water pipes stretching throughout the country. The fixed cost of this investment is very high.

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