Answer to Question #49408 in Other Management for emily
The company is planning to expand its production department. Briefly expelling why it might be ruining low on cost in next few months?
In microeconomics, economies of scale are the cost advantages thatenterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. Often operational efficiency is also greater with increasing scale, leading to lower variable cost as well. Economies of scale apply to a variety of organizational and business situations and at various levels, such as a business or manufacturing unit, plant or an entire enterprise. For example, a large manufacturing facility would be expected to have a lower cost per unit of output than a smaller facility, all other factors being equal, while a company with many facilities should have a cost advantage over a competitor with fewer. So, if he company is planning to expand its production department, it might be ruining low on cost in next few months according to economies of scale.