Why growing larger can sometimes make production more expensive
In short: Explore the fundamental relationship between production volume and cost. This video explains how changes in output impact long-run average total costs for firms.
The video examines three distinct long-run scenarios for a firm's average total cost as output expands. It covers economies of scale, where costs per unit decrease as production rises, and diseconomies of scale, where costs per unit increase. It also explains constant returns to scale, a state where costs remain unchanged regardless of output levels.
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Sources
- Summary by Intellect · source: Economies and diseconomies of scale | APⓇ Microeconomics | Khan Academy
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