Economies diseconomies of scale.docxVIP

Economies diseconomies of scale Author:  HYPERLINK /blog/index.php/site/author/3/ Geoff Riley ?Last updated: Sunday 23 September, 2012 Introduction Here we focus on long run costs, the effect of economies of scale on unit costs, prices and competition in markets. What are economies of scale? Economies of scale are the cost advantages that a business can exploit by expanding the scale of production The effect is to reduce the long run average (unit) costs of production. These lower costs are an improvement in productive efficiency and can benefit consumers in the form of lower prices. But