Growth of a Corporation Notes
1. Define scale of operation:the volume in which production is been made. For example
volume , liters, Tonnes, Gallons, Pieces etm. It is simply the unit of the Product produced
during a course of operations.
2. Define economies of scale:refers to the phenomenon where the average costs per unit
of output decrease with the increase in the scale or magnitude of the output being
produced by a firm.
3. What are the cost benefits of economies of scale:Economies of scale are cost
advantages that can occur when a company increases their scale of production and
becomes more efficient, resulting in a decreased cost-per-unit. This is because the cost
of production is spread over more units of production.
4. Define diseconomies of scale:Diseconomies of scale happen when a company or
business grows so large that the costs per unit increase. It takes place when economies
of scale no longer function for a firm.