what exactly are economies of scale? how do they come about, and what do they do exactly?
In: Economics
If you want to make a ham and cheese sandwich you need to open your pantry for 2 slices of bread bread, your fridge to get a slice of ham, and then in it your cheese drawer for a slice of cheese. Set all the stuff down, put it together and make a sandwich.
If you want to make 5 ham and cheese sandwiches for your whole family, you just grab more when you go to the fridge and pantry. You still need to assemble the sandwiches, but you place 5 pieces of bread down at once, put on the 5 slices of cheese at once, of ham at once, and the topper.
This sorta illustrates two of the pieces that make economies of scale work (there are many!), we have purchased things in bulk and our supply chain isn’t that much more complicated for 5 than for 1. And we have formed a rudimentary assembly line, that is its usually faster to do the same thing over and over again than it is to switch tasks.
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