08/08/2025
Economies of scale, also known as cost advantages of scale, refer to the reduction in production expenses and business experiences when it expands output and operates more efficiently. In other words, as a company grows in size and production volume, it can achieve lower per-unit costs and gain a competitive cost advantage. These savings can then be used to boost profit margins or passed on to customers in the form of lower prices, thereby strengthening the company’s market positions.