Question

The following is an extension economy of scale

Answer 1

The example of an extension economy of scale is Bulk buying.

Explanation:

• economies of scale are the main cost whose advantages are for the enterprises that  obtain due to their scale of operation, which is measured by the amount of output produced by the company with cost per unit of output resulting in decreasing with increasing scale.

• Economies of scale apply to a vast variety of organizational and business situations and at multiple areas, such as a production, the plant or an entire enterprise.

• Another source of scale economies is the possibility of purchasing inputs at a lower cost per unit, when they are purchased in large quantities.

• Managerial economies of scale occur when large firms are able to afford specialists. They manage i an effective manner, particular areas of the company.

• Economies of Scale refer to the cost advantage that us experienced by a firm when it increases its level of output.
• The advantage of the huge buying arises due to the inverse relationship between per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost.