Theory of production - Scale of production

Economics SSS1 First Term

   WEEK 9

Theory of production - Scale of production

Performance Objectives

Student should be able to:

1. Explain the meaning of scale of production.
2. State the advantages and disadvantages of large scale production.

Content

Economies of scale or scale of production

Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods. The size of the business generally matters when it comes to economies of scale. The larger the business, the more the cost savings.

Types of economies of scale

There are two major types of economies of scale. These…