Types of EOS

• What are the types of economies of scale?


  • risk-bearing
  • managerial
  • financial
  • purchasing
  • technical
  • marketing
• What is meant by risk-bearing EOS?


  Larger firms may be better equipped to handle unexpected market fluctuations and risks, reducing the overall cost or risk management.
• What is meant by managerial EOS?


  Larger firms may benefit from having specialised management teams, better coordination, and more efficient decision-making processes. This can result in cost savings and increased efficiency.
• What is meant by financial EOS?


  Larger firms may have access to more favourable financing options, including lower interest rates on loans and better terms from suppl0iers due to their size and financial stability.
• What is meant by purchasing EOS?


  When the production costs on a per-unit basis decline as the output increases, resulting in cost savings and higher profit margins.
• What is meant by technical EOS?


  When a firm can produce goods or services more efficiently as it increases its scale of prodUction. Factors such as specialisation of labour, better utilisation of machinery, and improved production processes can lead to technical economies of scale.
• What is meant by marketing EOS?


  Ad firms grow larger, they often have more resources to allocate to marketing and advertising efforts. This can lead to lower advertising costs per unit sold and increased market presence.