Unit 3 Discussion Board: Analyzing Economies of Scale for AutoEdge

This discussion board post examines the concept of economies of scale and its relevance to the hypothetical company, AutoEdge. The assignment begins by defining economic efficiency and its importance in maximizing productivity while minimizing waste, highlighting the variables necessary for calculating economic efficiency. It then explores economies of scale, where goods are produced on a large scale with reduced input costs, and the resulting benefits such as increased productivity and lower costs. The post differentiates between internal and external economies of scale, and discusses how AutoEdge can leverage specialization and division of labor to achieve greater returns. Furthermore, it addresses the potential for diseconomies of scale, emphasizing the importance for AutoEdge to prevent such issues and maintain optimal efficiency. The assignment references key factors that influence the economies of scale, including communication and management of employees. The post concludes by underscoring the crucial role of economies of scale in lowering unit costs and fostering internal opportunities for AutoEdge.

Running head: ECONOMIES OF SCALE
Economies of scale
Name of the student
Name of the university
Author note

ECONOMIES OF SCALE
The economies of scale
The economies of scale is related to the reduced costs per unit which takes place as a
result of increase in the total output of a product. The economies of scale is known to be the
comparative advantage which the large entities have over the smaller ones (Athanassiou,
2015). There are basically two types of economies of scale. They are the internal economy
and the external economy. The economies of scale can be termed as a significant feature of
the business. One of the main function of the economies of scale is to lower the cost per unit
and the average cost. The business also does not go beyond the economies of scale. When
the business grow and the expenses star to increase, it will lead to diseconomies of scale. By
using the economies of scale perfectly, it will lower the unit cost for AutoHedge and will also
help them in developing internal opportunities (Baumers et al. 2016). The firm AutoEdge will
be acquiring economies of scale in many ways. It can acquire specialization as well as
separation off labor in order to achieve greater returns. Diseconomies of scale will lead to
lowing returns to scale and is a kind of approach which gives reason for what happens when
the economies of scale are no longer favorable for the organization. Therefore, AutoEdge
must see that the diseconomies of scale does not take place.
AutoEdge using economies of scale
The economies of scale is achieved when the goods are produced on a large scale with
very few input costs (Athanassiou, 2015). A company will be able to raise its productivity by
lowering its cost which states that the company is operating quite efficiently. When the
techniques are used efficiently with time, the employees will be able to improve its skills
which will be needed for them in order to perform its jobs efficiently in the market. The
company AutoEdge will also be able to propose more products for their customers and of a

ECONOMIES OF SCALE
superior quality which will be saving both the time and money. Although the diseconomies of
scale may take place due to many reasons which may include poor communication within a
business which might have not been recognize the process of communication. The control of
the employees will be lost quickly when the company have grown and also raised the number
of workers (David Myers CEcD, 2015). The huge number of workers of the AutoEdge will
also make it easy for the employees for deceasing the performance since the managers have
huge number of employees to manage. Diseconomies of scale will also be taking place when
there will be presence of large number of workers.

ECONOMIES OF SCALE
Reference list
Athanassiou, M. (2015). Economies of Scale. Wiley Encyclopedia of Management, 1-1.
Baumers, M., Dickens, P., Tuck, C., & Hague, R. (2016). The cost of additive manufacturing:
machine productivity, economies of scale and technology-push. Technological
forecasting and social change, 102, 193-201.
David Myers CEcD, M. A. (2015). economies of scale. Economic Development
Journal, 14(3), 11.
Polkinghorn, A. (2016). Economies of scale. The British Journal of General
Practice, 66(648), 351.