Question

How is learning by doing related to the concept of economies of scale? Can a firm enjoy cost savings from both?

Answer 1

Answer - When the employees are asked to perform a particular task in a repetitive manner , each time that task is performed , the efficiency rises. This is called learning by doing. During this , as the efficiency keeps on increasing , the cost with every rise in output goes on falling. Hence learning by doing also leads to economies of scale.

Learning by doing saves the cost of employee training which could have occured if the training was provided externally. It also increases the efficiency. Economies of scale is defined as the reduction in cost as the output increases. Hence yes , both of these concepts involves cost saving for the firm