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Economies of Scale.
This assignment will reinforce the concept of economies of scale. Economies of scale can provide firms with a competitive cost advantage that arises with the increased output of a product. The greater the quantity of a good produced, the lower the per-unit cost because these costs are shared over a larger number of goods.
Example.
The idea of lowering the cost per unit of production multiplied by the total output is called economies of scale. Economies of scale are typically the cost advantages that an organization can achieve based on the scale of its operations. As a result, as production scales up, production costs per unit drop. Similarly, we can approach the issue from a different angle by purchasing inputs in larger quantities at lower prices per unit, thereby lowering production costs. The idea of economies of scale originates from Adam Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations" in the early 1776s when neoclassical and classical economists were largely at odds. Smith asserts that employing the concept of labor division results in the highest possible production rate.
