Q. Economics of scale?

An amalgamated company will have more resources at its command than the individual companies. This will help in increasing the scale of operations and the economies of large scale will be availed. These companies will occur because of more intensive utilization of production facilities distribution network research and development facilities etc. these economics will be available in horizontal mergers (companies dealing in same line of products) where scope of more intensive use of resources is greater. The economies will occur only up to a certain point of operations known as optimal point. It is a point where average costs are minimum. When production increase from this point the cost.