Discussion threads

Post Reply
Forum Home > Project Management Professional (PMP) > Whats the meaning for the term "Economies of scale" ?

s_anupkumar
Site Owner
Posts: 57

"Economies of Scale" refers to the cost advantages that a business obtains due to expansion / increased sale / improved efficiency / best use of technology etc. These factors may cause an organization's average cost per unit of a product to fall as the scale of output is increased.

For example: In an organization when production units increases, it will have a better chance to decrease the cost margin. According to this theory, economic growth may be achieved when economies of scale are realized

Just like there are economies of scale, "dis-economies of scale" also exist. This occurs when production is less than in proportion to inputs. What this means is that there are inefficiencies within the firm or industry resulting in rising average costs.

February 3, 2015 at 3:25 AM Flag Quote & Reply

You must login to post.