Economies of scale

• As a business grows, it can experience economies of scale. This is when the average unit cost of a product falls
• As a business gets bigger, it is able to buy in bulk. They will be given bulk-buy discounts which will reduce the unit cost of each product
• As a business gets bigger it can purchase more advanced machinery and equipment. They can also purchase larger buildings to produce more
• As unit costs fall, the firm will make more profit per unit. They can also reduce their selling price to make themselves more attractive to potential customers without losing profit