economies of scale

economies of scale definition - business

economies of scale

The increase in production efficiencies realized as output increases. For example, a manufacturer may be able to produce 100 units at $40 per unit and 150 units at $35 per unit. Economies of scale result in big companies having lower unit costs and enjoying an economic advantage over smaller companies. Compare diseconomies 1.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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