Asked by Brooke Myers on Jul 23, 2024

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How does simultaneous consumption affect economies of scale?

Simultaneous Consumption

A consumption pattern in which a product or service is consumed by multiple users at the same time without reducing its availability to others.

Economies of Scale

The financial benefits companies experience from expanding their operation's size, where there's a general trend of decreasing unit costs with the growth in scale.

  • Gain insight into how economies of scale, natural monopolies, and regulatory practices interact within markets.
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Blaise De LimaJul 24, 2024
Final Answer :
A product's ability to satisfy a large number of consumers at the same time is called simultaneous consumption. Lenovo needs to produce a laptop for each customer, but Microsoft needs to produce its Windows program only once. Then, at very low marginal cost, Microsoft delivers its program over the Internet to millions of consumers. Music producers and video game makers have similarly low marginal costs when delivering their products to additional customers. Because their marginal costs are so low, their average total cost of output declines as more customers are added and the fixed costs of product development are spread over more and more users, resulting in economies of scale.