ECONOMIES OF SCALE
Economies of scale refers to the situation when a firm
increases his output in the long run his output per unit cost will decrease.it
is called Economic of scale.
Type of economies –
1) Internal economies of scale – because of the internal management cost of
production reduces.
Example – bulk buying is an example of internal economies
2) External economies of scale - Cost reduces due to whole industry grow in
size.it get benefit to all the people.
Example –
a) GST for a company
effected to whole company.
b) if a company starts
in tax free business countries is an example of external economic of scale.
My own experience in Economies of scale concept
One day I was thinking to buy some goods from online site Flipkart.
the price of one product was rupee 1000 and the delivery charge was rupee 70.
but I was used to buy some other products also. so my total cost of products
was rupee 5000 but the delivery charged was still rupee 70. because I bought in
bulk so my per unit cost of goods decreased.so their products cost was variable
cost and delivery charged was fixed cost.
So now we can say when I increased output my per unit cost
started decrease.
If we will think about firm, then also when they start buy
something in bulk their per unit cost will decrease.
No comments:
Post a Comment