Respuesta :
It costs a firm $90 per unit to produce product a and $70 per unit to produce product b individually. If the firm can produce both products together at $175 per unit of products a and b this exhibits signs of economies of scale.
What is economies of scale?
The phenomenon known as economies of scale occurs when the scale or magnitude of the production produced by a firm increase while the average cost per unit of output decreases. Because of economies of scale, larger businesses have a competitive edge over smaller ones because their cost per unit is cheaper as they grow larger.
How do economies of scale function?
Economies of scale are stated to be obtained when more units of a good or service can be produced on a bigger scale while having (on average) lower input costs. Alternately, this suggests that a corporation will have a better chance to reduce its expenses as it expands, and its production units rise.
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