Have you heard of economies of scale and wondered what it's all about? In this interactive video, we'll be exploring this important concept and its impact on a business's success. We'll be using the example of a van-based doughnut company called Donut Stop Believing, which has been successful in selling doughnuts from a converted VW Campervan in Whitby. But now Lottie, the founder, is considering expanding the business by opening five additional trucks at other seaside resorts to reduce production costs.

Economies of scale occur when the average cost per unit falls as output increases. This is due to the fixed costs of the business being spread over a larger number of units, resulting in lower average costs. However, it's important to note that there is a limit to the benefits of economies of scale, and businesses can experience diseconomies of scale if they become too large and inefficient.

By the end of this video, you'll have a solid understanding of the concept of economies of scale and how it can impact a business's success. You'll also have a clear understanding of the different types of economies of scale and how they can be leveraged to reduce costs and improve efficiency.