Economies of scale: Refers to the case where the average unit cost of production decreases as the level of output increases, where unit cost refers to the cost of producing a single unit of output. In business, the explanation for this reduction in unit cost is usually described as resulting from purchasing, technical, marketing, managerial, and financial economies of scale
Purchasing
Often it is possible to acquire inputs such as ingredients and materials at lower cost when larger amounts are purchased.
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Marketing
When the costs are spread over a larger volume of sales, the marketing costs attributable to a single unit of output decrease.
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Financial
An economy where due to the success of a company, that company will be able to negotiate a lower rate of interest and therefore allow themselves to increase the prices.