Which department is commonly associated with internal economies of scale through bulk purchasing?

Which department is commonly associated with internal economies of scale through bulk purchasing?

• A. Admin
• B. Purchasing (bulk)
• C. R&D
• D. Marketing

Answer: (B)

Internal economies of scale come from the firm’s own activities that reduce average costs as output rises, with bulk purchasing being a classic example. The team that coordinates what the company buys and negotiates with suppliers—the Purchasing department—uses large, consolidated orders to secure lower unit prices, volume discounts, and better terms. That ability to lower costs by buying in bulk is why this department is linked to internal economies of scale. Other departments—Admin handles general administrative tasks, R&D focuses on developing products, and Marketing drives sales and promotion—do not primarily generate the same per‑unit cost reductions through bulk procurement.

Internal economies of scale come from the firm’s own activities that reduce average costs as output rises, with bulk purchasing being a classic example. The team that coordinates what the company buys and negotiates with suppliers—the Purchasing department—uses large, consolidated orders to secure lower unit prices, volume discounts, and better terms. That ability to lower costs by buying in bulk is why this department is linked to internal economies of scale. Other departments—Admin handles general administrative tasks, R&D focuses on developing products, and Marketing drives sales and promotion—do not primarily generate the same per‑unit cost reductions through bulk procurement.