Economies of scale: when is it disadvantageous? So, I watched a video on economies of scale. It makes sense to me but I'm wondering, is there a point where say doubling the production rate makes the product even more expensive? How can I figure out the equilibrium point and thus maximum useful rate for producing a product assuming certain restrictions on availability of product, maximum distance to customer, value of ingredients, and other factors? I imagine it would be something like this:



Exponential decay in price until certain point is reached



Stops decreasing right at relative price = 0



Exponential growth after the equilibrium point as relative price goes in the positive direction.
I would give you a simple answer: when the marginal cost is equal to the marginal income. This would be the equilibrium and beyond that the company would lose money.