Define Economies of Scale and List Out Its Four Principle

question 68

Essay

Define economies of scale and list out its four principle sources.

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Definitions:

Production

The process of creating goods or services by combining various inputs like labor, raw materials, and machinery.

Marginal Productivity

Marginal productivity refers to the additional output that is produced by adding one more unit of a factor of production, holding all other factors constant.

Labor

Labor refers to the human effort, both physical and mental, used in the production of goods and services, forming a crucial component of the economic production process.

Isoquant

A curve illustrating all possible combinations of inputs that yield the same quantity of output, demonstrating how firms can substitute between different factors of production to maintain output levels.