November 3, 2026
Money Matters

Economies of Scale

by

It is Navratri and sweet shops are preparing for a busy week. Imagine two sweet shops. Shop A is small and makes 100kgs of sweets. Shop B is much larger and makes 1,000kgs of sweets. Can you guess which shop is most likely to offer you a discount and why?
Economies of Scale
Both shops need the same ingredients, such as flour, sugar, ghee and dry fruits. These are called raw materials. Both shops also need equipment such as cooking vessels, refrigerators and mix ers. Now let’s assume that both shops have the same ₹5,000 set-up cost for this period. And the raw mater
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