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Declining transport rates per unit of weight as the weight shipped increases represents Economies of Scale.

What is Economies of Scale?

The cost advantages that businesses gain as a result of their size of operation are known as economies of scale in microeconomics. They are commonly quantified by the amount of output generated in a given amount of time. Scale can be increased when the cost per unit of output decreases. Technical, statistical, organizational, or other relevant variables to the level of market control may be at the core of economies of scale.

A common limit for economies of scale is when costs per extra unit start to rise after the optimal design point. Overcoming the local raw material supply, such as wood in the lumber, pulp, and paper industries, is a common restriction. A typical restriction for low cost per unit weight goods is saturation of the local market, necessitating the need to ship goods over unfeasible distances. Other restrictions include having a higher defect rate or using energy less effectively.

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