22-6 Sensible reasons for Mergers Economies of scale a larger firm may be able to reduce its per unit cost by using excess capacity or spreading fixed costs across more units Reduces costs Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 22- 6 Irwin/McGraw-Hill Sensible Reasons for Mergers Economies of Scale A larger firm may be able to reduce its per unit cost by using excess capacity or spreading fixed costs across more units. $ $ $ Reduces costs