ECONOMICS

Detailed explanation-1: -Economies of scale occur when the per-unit cost of production falls as the number of units produced increases. 1 In the context of banking, scale economies exist when the cost per dollar of loans (or assets) declines as the number of loans (or assets) increases.

Detailed explanation-2: -External Economies of Scale These occur when there is a highly-skilled labor pool, subsidies and/or tax reductions, and partnerships and joint ventures-anything that can cut down on costs to many companies in a specific industry.

Detailed explanation-3: -When more units of a good or service can be produced on a larger scale, yet with (on average) fewer input costs, economies of scale are said to be achieved. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs.