What is the result of applying technical economies effectively?

Applying technical economies effectively leads to reduced average costs for a firm. Technical economies refer to the cost advantages that a business gains due to the scale of its production processes and the use of advanced technologies. As production scales up, fixed costs such as machinery and equipment are spread over a larger output, which lowers the average cost per unit. Additionally, the implementation of more efficient production techniques and specialized machinery can increase productivity, further contributing to cost reductions.

For instance, in mass production, companies may invest in automated systems that enhance efficiency and minimize labor costs, resulting in overall lower costs. This allows firms to either retain higher profit margins or reduce prices, making them more competitive in the market. Consequently, the primary outcome of effectively applying technical economies is achieving lower average costs, which is crucial for a company's financial health and competitive positioning.