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Sources of Economies of Scale

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What are the sources of economies of scale in production? Please provide 2 examples.

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Solution Summary

This solution provides you with a detailed explanation of what economies of scale is and what are some of the sources of economies of scale in production (examples are included). Note the solution is adequately referenced.

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In order to answer this question, you first need to note what is economies of scale, after which you can give examples of sources from which firms may get achieve or get economies of scale.

According to Clayton (2001), "when a larger firm is able to use its personnel, equipment, and plant more efficiently - this results in economies of scale. Economies of scale is a situation in which the average cost of production for a firm falls as the firm gets larger." When this happens, it makes sense for the firm at times to be as large as is necessary to lower its production costs. And, I say as large as is ...

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