“The cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.” – Gabriel Weinberg
“In microeconomics, economies of scale are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.
Economies of scale apply to a variety of organizational and business situations and at various levels, such as a business or manufacturing unit, plant or an entire enterprise. For example, economies of scale apply to the fixed cost to produce units of output through production and manufacturing. When average costs start falling then economies of scale are in production with fixed costs being a requirement for the equation. With no fixed costs, the average cost and average variable cost would be equal”- Wikipedia (James Clear)
Startups: “Economies of scale are simple economics where the costs of your product or service decreases as the volume increases. Facebook, Amazon, Apple and Google all have strong economies of scale.” – Adam Smith
Source:
Gabriel Weinberg’s Mental Models I Find Repeatedly Useful
https://medium.com/@yegg/mental-models-i-find-repeatedly-useful-936f1cc405d
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James Clear Mental Models Overview
https://jamesclear.com/mental-models”
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Adam Smith via “”13 Mental Models Every Founder Should Know””
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