Economies of scale

• what is economies of scale?

  falling unit costs experienced as a business increases its size
• what is purchasing economies?

  Bulk buying discounts, when a business buys large amounts of raw materials or other items
• what is marketing economies?

  Efficiency in advertising and distribution that causes falling unit costs when the output increases
• what is technical economies?

  Cost savings achieved through the use of specialized equipment or processes that can create a larger amount of products to sell
• what is managerial economies?

  Efficiency in management, that causes a falling unit cost that can be spread over a larger output
• what can purchasing economies do?

  increase a businesses power in negotiations however this could be consider unethical as a bigger business bullies a smaller one into a deal
• what does economies of scale in general lead to?

  lower unit cost> lower price or higher profit> more customers