Explain what economies of scale are and why they have become increasingly common in later years.
Economies of scale - Enhance in fixed factors, but output enhances at a proportionately higher rate than unit costs
- internal economies of scale
a) Technical economies of scale - spreading of fixed costs, improved use of capital
b) Managerial economies of scale - higher efficiency in firms production units by specialisation
c) Purchasing economies - bulk buying, good customer prices
d) Marketing economies of scale - advantages of having broad brand-name recognition
e) Financial economies of scale - larger asset base for security in loans, lower interest