Different Economies of Scale

Law of returns to scale examines the input-output relation when all the inputs are changed simultaneously in the same ratio. When a business firm grows in size or increase the scale of operations it can derive production advantages from market and firm size in terms of low average cost of production. Such production advantages due to large scale operations are known as economies of scale. It is present when an increase in output causes long run average cost to fall. The fall in cost of production (average) is because of…

Read More