Economics, economies of scale question?
Using a diagram, explain how the increased size of supermarkets has led to economies of scale.
Not clear that it has. When compared with 10 stores of 1/10 the size, there are clear economies of scale: - fewer total cashiers - fewer total deliveries from each producer etc. At the same time, you expect a large supermarket to have more choices than a small one. That means that there are additional costs as well: - more goods being delivered - for each individual good lower sales per customer etc. In addition, there are the additional costs associated with size: - finding a site large enough that is close enough to enough customers Then there are the iffy questions: - It is less convenient to shop in a large store you have to drive to. That means that people will tend to buy more each time they go, decreasing the cashier time per item purchased. But does it also mean people will tend to buy less in total?
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