What is Economies of Scale?

Economies of scale (ES) can be defined as a decrease in the average costs of production when there is an increase in the scale of production of a company, it refers to a situation when the number of production surges and the cost per unit dips. It occurs when there is a reduction of costs given a proportional rise in production. Economies of scale enable a firm to sell its products at more competitive prices and to capture a considerable share of the market.

 

Economies of scale are said to be achieved when more units of