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Essay / Research Paper Abstract
This 5 page paper examines this concept. Examples are provided. Bibliography lists 4 sources.
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5 pages (~225 words per page)
File: RG13_SA01145eos.doc
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142). Essentially, what this means is that companies can step up production, without investing much more money into the process. This in turn results in more product, so output increases
while input does not have to increase proportionally. An example is that when one creates an invention, and makes a prototype, he goes out and manufactures the prototype. The prototype
costs a lot of money to create. Yet, when mass-producing the product from the prototype, each product is increasingly less expensive. One includes the cost of the prototype into the
manufacturing process. A similar situation occurs in the pharmaceutical market where the initial production of a new medication costs a lot because research and development must be factored in. When
the product is sold over the course of a number of years, the cost of manufacturing the pill diminishes. Investopedia defines economies
of scale in this manner: " When more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs,
economies of scale (ES) are said to be achieved" ("What are Economies of Scale," 2009). The article goes on to say that when a company expands, the production units increase
and this provides the firm with an opportunity to decrease its costs ("What are Economies of Scale," 2009). As noted by other examples, when a company has the need and
the ability to produce more product, they can glean more profits. Obviously, there must be a need to do so. Companies that start out and decide that they will manufacture
the next big thing may be mistaken. These kind of blunders can cost investors a lot of money. If a product is unsuccessful, manufacturing a greater number of pieces will
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