Question

what is economies of scale?

Answer 1

When more units of a good or a service can be produced on a larger scale, yet with (on average) fewer input costs, economies of scale are said to be achieved. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs. According to this theory, economic growth may be achieved when economies of scale are realized.

Economist Adam Smith identified the division of labor and specialization as the two key means to achieving a larger return on production. Through these two techniques, employees would not only be able to concentrate on a specific task but with time, improve the skills necessary to perform their jobs. The tasks could then be performed better and faster. Hence, through such efficiency, time and money could be saved while production levels increased.

Answer 2

1.
a proportionate saving in costs gained by an increased level of production.