Consequently, it is seldom worthwhile for firms in those countries to start producing the product. This view conforms to product life-cycle theory.
This scenario shows how a business can use economies of scale to produce a good less expensively than its rival. The term "economies of scale" in microeconomics refers to the cost advantages that businesses achieve based on their size, level of production, or operational scale. As scale increases, the cost per unit of output typically decreases as fixed costs are distributed across more units of output.
When a company grows in size, it is able to produce goods more efficiently, which leads to the development of economies of scale. In manufacturing, where larger production facilities result in lower per-unit production costs, the idea is frequently applied.
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