two different types of economies of scale
...hinery can be operated for a longer time enabling greater productivity per machine. c) Also the cost is not proportionately high because for e.g. Packing a box of 1 Kg of chocolate is not as high as packing 4 boxes of 250 grams of chocolate each. That is why products are cheaper when you buy them in a bulk or in big size. Managerial economies. Increase in production rarely affects the effectiveness of managers in a firm. Also the same manager can look after the company even if the production increases. So in a way larger firms can employ specialist managers who can increase the efficiency of the business. Trading economies. If production increases then large firms can buy their raw material in bulk, which would be cheaper due to discounts. Also costs of items such as research and development, advertising and distribution do not increase in proportion to increases in production and sales. Financial economies. Large firms pay less interest on money compared to smaller firms as their size gives them the power to bargain with the lender. Also their royalty and credit in the market can draw them enough funds and charity compared to other smaller and less popular firms. Marketing economies. The costs of advertising and promotion are spread over a large number of units and a...