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Variables affecting economies of scale

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Economies of scale

Develop a list of variables that may affect economies of scale (taxes, rent, overhead costs, quantity discounts on ordering from suppliers, efficiency of production, etc.) and describe with real life examples of how these factors may affect the price of each unit, and how a firm may incorporate these concepts to take advantage of economies of scale. of economies of scale.

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The solution contains variables affecting economies of scale

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Economies of scale is achieved by the organistion when the organisation grows , production is made on the large scale and and the relevant unit input cost is reduced. Economic growth can be achieved when the organisation achieves the economies of scale in its operations.

The following are the variables that affect the economies of scale:

1. Lower input costs: When the organisation orders the raw materials on a large scale for the large volume of production, then ,it can avail the volume discount(quantity discounts) which will reduce the total unit cost of production thereby increse the profit margin of the organisation.

2. Expenditure on training.

The orgainisation spends money on the training of the personnel related to ...

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