3 ms·

I thought the marginal cost for most goods goes down as the scale goes up

• dchftcs 3y ago
  That's not a physical law. It only happens sometimes in some parts of the supply chain in the form of economies of scale. But if you run out of easily drilled oil sources, the unit cost of produce more oil increases. If you want to build more cars, you would increase demand for parts, and would in turn be willing to pay more for the scarcer parts, and your BOM increases. It only makes sense to refer to what you described as a phenomenon you want to pursue if you want to run a successful business, but can never be used to describe the economy as a whole.
• Enginerrrd 3y ago
  Yes and no. If you own a factory operating at design capacity, and a supply shock bumps prices up enough to incentivize you to increase supply, your marginal cost is probably going to go up to get from %100 to 120%. (Overtime, more expensive downtime, increased duty cycles on equipment, more expensive rush repair, etc.