What is economies of scale nedir?

Economies of scale refer to the cost advantages that arise when the volume of production increases. The concept suggests that organizations that produce goods and services in large quantities enjoy lower costs per unit, leading to increased efficiency and competitiveness. The basic principle is that as the scale of production increases, fixed costs, such as machinery and equipment, can be spread over a larger quantity of output, lowering the per-unit cost. Additionally, as organizations grows, they can take advantage of further discounts for bulk purchases and can often negotiate better deals with suppliers. This leads to a gradual decrease in unit cost, which ultimately results in improved profitability. However, there is a limit to the benefits of economies of scale, with some firms becoming too large to manage effectively, leading to diseconomies of scale.