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Economies of scale-low input cost

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.

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Economies of scale are achieved by the orgnaization when the organization grows, production is made on the large scale and the relevant unit input cost is reduced. Economic growth can be achieved when the organization 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 organization 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 increase the profit margin of the organization.

2. Expenditure on training.

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

Solution Summary

The answer contains the factors of economies of scale and how the economies of scale affect the price of the product and facotors will contribute to the economies of scale by examples.

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