DEFINITION of 'Economies Of Scale'
Economies of scale is an economic term describing a business model where the long-run average cost curve declines as production increases, or in a simple example explaining the principal, where a manufacturing company saves money as it produces higher quantity of its product, as in all business areas, 'the more you buy, the more you save' and then make a lower cost. When you grow more because production costs are fixed costs that make the production more efficient and competitive.