Final answer:
Businesses such as large manufacturing plants and natural monopolies typically experience economies of scale due to expanded operations. These economies arise because of substantial fixed costs and low marginal costs, leading to lower average costs as production increases. In contrast, individual financial planners and small local retailers do not benefit from economies of scale in the same way.
Step-by-step explanation:
The type of business that usually experiences economies of scale due to expanded operations is typically characterized by high initial fixed costs and low marginal costs for adding additional customers. A large manufacturing plant often exhibits these characteristics, as it requires substantial initial investment in machinery and infrastructure, but the cost to produce each additional unit decreases as production scales up. This is in contrast to businesses like individual financial planners or small local retailers, which may not have high fixed costs or significant opportunities to reduce average costs with additional scale.
Natural monopolies also experience economies of scale but differ in that they exist where the market is most efficiently served by a single provider due to substantial economies of scale relative to the size of the market. For instance, utility companies such as water or electricity suppliers commonly fall into this category. Their initial infrastructure investments are high (laying pipes or cables), but the cost of servicing an additional customer is minimal.
These dynamics contribute to the phenomenon where larger operations like a 'V' sized very large plant can monopolize a market, producing goods at a much lower cost than smaller producers, hence providing less room for competition. However, beyond a certain point marked as 'L' in economic models, additional production may not reduce average costs further, and may even lead to diseconomies of scale.
When considering international trade, a few large producers may dominate the market in a country, which could lead to limited consumer choices and little competition. This can be seen in industries such as automobile manufacturing where a single large factory could potentially supply a country's entire demand for cars, limiting variety and competition.