Economies of Scale

Revision notes for Unit 3 Business studies Edexcel on Economies of Scale

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Harry Bindloss
Economies of scale: These are the benefits of producing on a large scale resulting in lower
unit costs. If nations specialise in what they are best at not only will output rise due to
comparative advantage but unit costs will fall due to economies of scale. Therefore prices
are lower and consumers are better off.
Diseconomies of scale: The negative effects of increasing the scale of production that
results in higher unit costs.
You would need to be efficient to remain at that point by using both human and non-human
methods of efficiency.
The minimum efficient scale (MES) ­ The level of output which AC ceases to fall. In some
industries the MES is a significant proportion of total industry sales.


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