Discuss about the Report for Natural Resource Economics.
The sales report infers that Amazon has economies of scale as the company has been experiencing sales growth. Economies of scale is the cost advantage that the company achieves by increasing the output of the product. There is an inverse relation between the quantity produced and the fixed cost per unit of the product offered by Amazon (Myers, & Cecd, 2015). This relation gives rise to the economies of scale. The variable cost per unit might also get reduced due to the operational efficiencies and synergies.
The increase in the sales has been possible since the company is able to lower the price of products. The low product price increases the demand and thereby raising the sales (Lowe, 2012). Amazon is able to provide low price product as they have decreasing average cost, ensuring economies of scale for the company. Thus, it can be inferred that as Amazon has decreasing average cost and increased sales, the business shows economies of scale, which is a great competitive advantage to sustain in the competitive market.
Lowe, S. E. (2012). Natural resource economics. Economics, 333, 001.
Myers, D., & Cecd, M. A. (2015). economies of scale. Economic Development Journal, 14(3), 11.