Economies of Scale: In microeconomics, these are the cost advantages that a business obtains due to expansion. They are factors that cause a producer’s average cost per unit to fall as scale is increased.
For example, producing one car is very expensive due to all the fixed costs, such as equipment, associated with producing just one car. However, once a car company can produce tens of thousands of cars then the average cost per car drops significantly.
Related Concept: Natural Monopolies
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