How do economies of scale affect pricing?

Can you explain how economies of scale impact pricing for businesses?

Sure! Economies of scale occur when the cost per unit decreases as production increases. This can lead to lower prices for consumers.

What are some examples of industries where this is evident?

Manufacturing and agriculture are prime examples. In manufacturing, larger factories can produce goods more efficiently, reducing costs.

Does this mean larger companies always have lower prices?

Not necessarily. While larger companies can benefit from lower costs, factors like market demand and competition also play a significant role in pricing.

How do smaller businesses compete with larger ones?

Smaller businesses often focus on niche markets, customer service, or unique products to differentiate themselves from larger competitors.