Merits of Economies of Scale

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Merits of Economies of Scale
Sandip Pandya
One more merit of economies of scale is in reduction in fuel cost due to inherent characteristic (not only due to organizing production more efficiently) of product or equipment as part of some of the operating cost listed above. However, the merit of economy of scale realized through the reduction in marginal variable cost is less in comparison of marginal increase in the product price. In the waterfall of pricing mechanism, the advantage or cushion realized due to economy of scale factoring some of the above economies of scale is a fraction of the increase in the unit price.



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