economies of scale



The reduction in long-run average and marginal costs arising from an increase in size of an operating unit (a factory or plant, for example). Economics of scale can be internal to an organization (cost reduction due to technological and management factors) or external (cost reduction due to the effect of technology in an industry). See also diseconomies of scale.

Use economies of scale in a sentence

  • The marginal cost of producing more products was so minimal due to the large economies of scale.

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