Economies+of+Scale

**Economies of Scale** is the "cost advantage" that arises with increased output of the product.
It appears because of the inverse relationship between the quantity produced per unit cost (fixed).

Description
This means that if a //__company grows__// and __//units production// //increases//,__ a company will have a better chance to //__decrease its costs.__// Because when the demand for good is high, it is better to decrease its costs to let the demand grows faster.
 * Achievement of ** Economy of scale ** can be demonstrated when more units of goods can be produced in large scale, and the input cost is lessens.
 * // As quantity of production increases from Q to Q2, the average cost of each unit decreases from C to C1. // ||

//Arises from within company.// //Example: When a company reduces costs and increases production of goods// //Arising from extraneous factors. Happens outside of a firm, within an industry.//
 * ** I **** nternal Economy of Sale **
 * ** External Economy of Sale **

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 * Explanation of Economy of Scale ||

Specific examples


====For example, Printer Quotes a price of 5,000$ per 500 brochure, and 10,000$ for 2500 copies. It means that 500 brochure will cost you 10$ per each, however for 2500 copies you will pay 4$ per brochure. IT can be seen that **cost advantage** arises. It is because the printer has an initial costs, regardless whether the number of brochure that will be printed is 500 or 2500. Once this costs are covered, only a marginal extra cost for printing is needed.====

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 * Economy of Scale or the Worst topic Ever ||

Contributor: Pshenov Amir
//**Lower input costs:** // When a company purchase raw materials by wholesale - for example, potatoes are applied in making French fries at a fast food chain - it can benefit from large discounts.

What Are Economies Of Scale? (2003, November 25). Retrieved December 13, 2014, from http://www.investopedia.com/articles/03/012703.asp

Resources

 * Newell, C. (n.d.). Economies of Scale. Retrieved December 5, 2014, from https://www.youtube.com/watch?v=duYQ7W-w258
 * Newman, J. (n.d.). Explaining Economies Of Scale - Video | Investopedia. Retrieved December 5, 2014, from http://www.investopedia.com/video/play/what-is-economies-of-scale/
 * Newman, J. (2014, January 12). Economies of scale. Retrieved December 5, 2014, from http://en.wikipedia.org/wiki/Economies_of_scale
 * Orokusaki, S. (n.d.). Retrieved December 5, 2014, from https://www.google.kz/search?q=economies of scale&espv=2&biw=1440&bih=713&source=lnms&tbm=isch&sa=X&ei=3ZGAVIbRLeOGywPs-YCgCg&ved=0CAYQ_AUoAQ#tbm=isch&q=decsription ofeconomies of scale&facrc=_&imgdii=_&imgrc=KwO6oYuRDYgWuM%3A;oyoddQl6oD4WGM;http%3A%2F%2Fi.investopedia.com%2Finv%2Fdictionary%2Fterms%2Fdiseconomies%2520of%2520scale.gif;http%3A%2F%2Fwww.investopedia.com%2Fterms%2Fd%2Fdiseconomiesofscale.asp;360;266