Apr 21 2012

Economies of Scale

Published by at 7:07 pm under

“The benefits of being big.” As a firm increases its output in the long run, it adds more factories, acquires more capital and land and labor and sees its average total costs decrease as it grows. This arises due to factors such as increase efficiency, bulk-ordering, reduced shipping costs, increased bargaining power with resource suppliers and labor unions, more favorable interest rates from lenders, etc…

About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

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