Managerial Economics 2nd Edition by William Boyes

Exercise 15

"The thing a lot of people don't understand about e-commerce is the degree to which it is a scale business," says Jeff Bezos, CEO of Amazon.com. Where a conventional retailer might have to double its capital spending to double sales, Amazon's costs are largely fixed. "Once our software is written, we can handle a lot of customers with it." Explain what this paragraph means.