Economies of scale refers to a situation where producing a larger output lowers the production cost per unit. This happens when a company expands its productive capacity and generally has large fixed costs which decrease by additional unit of output. It also applies to companies that provide services, e.g. Walmart is able to offer low prices because it buys larger quantities than any other brick and mortar retail store, so they get large purchase discounts.
Economies of scale can be described as a reduction in cost, this occurs when companies increases the rate of their production.
Economies of scale can also be reffered to as a process whereby an organization becomes more efficient and therefore reduces the costs of their products.
Economies of scale can be greatly influenced by a large amount of capital which is made available to companies to improve their various operations.
