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What economic concept does this describe?In the 1990s the number of hogs slaughtered...

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Mizdee | Student, Undergraduate | (Level 1) Valedictorian

Posted August 14, 2012 at 5:09 AM via web

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What economic concept does this describe?

In the 1990s the number of hogs slaughtered rose to record levels.  the inrease in production was the result of the rise of mega=producers that operated at a lower average cost than smaller producers.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted August 14, 2012 at 5:26 AM (Answer #1)

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While there are a number of economic concepts involved in the scenario you have given here, the most likely answer here is economies of scale.

Economies of scale occur when the average costs of producing a good or service go down as a firm produces more and more of the product. In this sort of case, large firms are at a major advantage when compared to small firms because they have lower average costs.  This is what is being described here.  The large producers have lower average costs than the small producers so production goes up.  This is an example of economies of scale.

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