The Roles of economies of scale: easyJet?

Question

I am really struggling with an assignment here. I would appreciate if someone could give me a few examples so i have an understanding of this, as i am completely lost.

Can someone please give me an example of economies of scale in the airline industry?

Answer 1

I sell Real Estate. It takes as much time and effort to sell a $125,000 condo as a $500,000 house.

If you own a restaurant the rent is the same if you are open 8 hours a day or 24 hours a day. The hourly cost is less.

Due to taxes and benefits it makes more sense to work 5 people 6 days a week than it is to hire a sixth person.

Answer 2

The first of anything (like a computer) is expensive cause its hand-made, one of a kind. As you set up to produce millions of anything (like computers)you get each one cheaper due to economies of scale.
A great example is the Canadian health care system.
Because of economies of scale each canadian gets a level of health care that would cost an american $600 per month plus co-payments for only about $300 per month (the price per individual of course goes up as the person earns more due to progressive taxation).

How do economies of scale come in?

In a private system, like the USA, there are thousands of insurance companies, hospitals, etc. competing for your dollars. Each of these has secretaries, marketing, sales etc. This is inefficient because jobs are duplicated or unnecessary.
In the canadian system there is only one insurance company for basic medical and that is government. There is no need for sales, marketing, boards of directors, share holder payments and necessary functions aren't duplicated. In addition, when the "system" wants to buy an item from the market they can buy in huge quantities thus getting economies of scale through quantitiy purchase discounts.

Answer 3

If you have one 747 you will need a specialised technical crew. If you have ten 747s you may need more technical crew, but not ten times as many.