Suddenly why did the biriyani shop reduced its price?

Example of economics of scale :

There is a biriyani shop near my locality in kolkata which used to provide biriyani for rs. 80. At first it only produced 100 packets a day. The demand started increasing as more and more number of people were coming. Due to this increased demand there was a increase in production by the shop. Few days later the shop started producing 200 packets a day but the price came down to rs 70.At first i did not understand but now i relate it with economics of scale. Due to increase in production the average cost of producing biriyani decreased. This enabled the shop to decrease the price frm 80 to 70.

WHY THEIR IS A DECREASE IN PRICE

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.