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Definitions from the WebEconomies of ScaleDefinition:Economies of scale refer to the cost advantages that a company or business can achieve as it increases its production output. It is a phenomenon where the average cost of production decreases as the scale of production increases. Sense 1: Cost AdvantageIn this sense, economies of scale describe the reduction in average production costs that occurs when a company increases its production output. This reduction can be achieved due to savings in factors such as raw materials, labor, and operational expenses. Example sentence: The large corporation was able to offer its products at a lower price compared to its competitors due to the economies of scale it enjoyed. Sense 2: Mass Production EfficiencyIn this sense, economies of scale refer to the improved efficiency and productivity achieved by a business when operating at a larger scale. Mass production allows for better utilization of resources, streamlined processes, and improved bargaining power with suppliers. Example sentence: The factory invested in new machinery to take advantage of economies of scale, allowing them to produce goods at a higher rate with fewer resources. Sense 3: Scope for SpecializationIn this sense, economies of scale imply the opportunity for specialized divisions or departments within a company. When a business expands, it can allocate certain areas of production to specialized teams, yielding higher productivity and expertise in each sector. Example sentence: The company diversified its product line by employing economies of scale and creating separate divisions for research, development, and marketing. Sense 4: Local Economies of ScaleIn this sense, local economies of scale refer to the cost advantages gained by businesses due to their geographical location. This can include factors like proximity to suppliers, shared infrastructure, or access to a skilled labor pool. Example sentence: The tech company chose to establish its headquarters in Silicon Valley to take advantage of the local economies of scale, benefiting from a vast network of technology-focused businesses. Related Products: | ||||
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