The economies of scale efficiently lead to lower per unit costs. There are several reasons for it. Firstly, production volumes are boosted through the specialization of labor and more integrated technology. Secondly, lower bulk orders can also result from bulk orders from suppliers, larger advertising buys, and lower costs of capital. Thirdly, awareness about internal costs across more units developed aids in reducing unit costs.
Economies of scale refer to cost advantages that are accessed by firms when production becomes more efficient. This is because costs can be spread over a larger amount of goods. Economies of scale can be both internal and external.
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