WordValeeconomies of scale
cost savings that come with larger production
In more detail
the financial advantages that a company gets by producing large quantities of products, because the cost per unit decreases as production increases
Examples
- The car manufacturer benefits from economies of scale by making thousands of vehicles, which lowers the cost of each car.
How to use economies of scale
Economies of scale is a technical business and economics term used to explain why larger producers can undercut smaller competitors on price. It appears frequently in discussions of manufacturing, retail, and industrial organization. The concept is especially relevant when explaining business consolidation, outsourcing, or the competitive advantages of multinational corporations.
Common phrases
- achieve economies of scale
- benefit from economies of scale
- realize economies of scale
- economies of scale in manufacturing
- economies of scale kick in
Synonyms
cost advantages · production efficiencies · bulk advantages · quantity discounts
A common mistake
Learners often use the plural 'economies' without realizing it is a fixed phrase; saying 'an economy of scale' (singular) is incorrect in standard usage.
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