Technical Economies:

They are economies that accrue from the use of large machines with emphasis on full utilization and efficiency in production. First, there are some equipment which are available only in certain minimum sizes, and unless the plant acquisition and usage will permit the production of at least these minimum output levels of production, it will not be economical. Secondly, large-scale production allows for the specialization of different sets of equipment

for the different functions. Thirdly, the firm can have a standby machine as an insurance against any form of equipment breakdown. Also, the specialization of machines aids the further development of division of labour. These benefits derived by the firm from such approach to production lead to substantial economies of scale thereby reducing the unit cost of output produced.