Understanding the Economies of Scale Tool

The aim of this tool is to look at the extent to which you achieve economies of scale or diseconomies of scale. When you are looking to expand or expand your business the aim is to look at a business that’s got an existing cost structure. Then, look at a partial budget approach to work out the extent by which the business achieves economies of scale by expanding through either purchasing or leasing more land, or a diseconomy of scale and to not expand.