Q. Illustrate about Pecuniary economies?
Pecuniary economies (which is monetary economies) are those economies accrued by the firm from paying lower prices for the factors used in distribution and production of the product because of bulk buying by the firm. They add to the firm on account of discounts it can attain because of its large scale production. They decrease the money costs of the factors for a particular firm.
Pecuniary economies are realised by a firm in the following ways:
- The firm would be able to get raw materials at lower prices owing to bulk buying.
- A large firm can get funds at lower cost which is at a lower rate of interest because of its reputation in the money market.
- The large firm may be given lower advertising rates if they advertise at large.
- Transport rates can be also low if the amount of commodities transported is large.