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Meaning of economies of scale

 

 

 

Economies of scale

 

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Business glossary

 

Meaning of term economies of scale :

 

An economy of scale is where average cost falls as production increases. Economies of scale are happening because larger firms are able to lower their unit costs. This may happen for a variety of reasons. A larger firm may be able to buy in bulk, it may be able to produce relatively more efficiently, it may be able to raise finance cheaper and it may have access to more efficient marketing methods.

 

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Economies of scale

 

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Meaning of term economies of scale

 

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