Which subject did you like the most in first term?Explain economies of scale? Why does the cost increase after certain volume? How can that be avoided?

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I enjoyed studying economics the most in my first term. Economies of scale occur when production costs decrease as output increases. However, after a certain volume, costs increase due to diminishing returns.

Economies of scale refer to the cost advantages that a business can achieve by increasing production output.
As production increases, fixed costs are spread over a larger output, resulting in lower average costs.
However, after a certain point, the benefits of economies of scale are outweighed by the costs of managing a larger operation.
This can lead to diseconomies of scale, where costs increase as output increases.
To avoid this, businesses can invest in technology and automation to increase efficiency and reduce costs.
They can also consider outsourcing certain functions or decentralizing operations to smaller, more manageable units.
For example, a small bakery may benefit from economies of scale up to a certain point, but may face increasing costs if it expands too much and has to manage multiple locations.
In contrast, a large manufacturing company may benefit from economies of scale by investing in advanced machinery and automation to increase production efficiency.

Which subject did you like the most in first term?Explain economies of scale? Why does the cost increase after certain volume? How can that be avoided?

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