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Economies of scale

Economies of scale Definition

Refers to a situation when the long-run average costs of producing a good or service decreases as output rises.

Efficiencies associated with larger-scale operations. For example, it might cost a manufacturer $100 to manufacture one unit, $180 for two units, $240 for three units, and so on, such that the average cost per unit decreases as production volume increases.

RELATED TERMS
Economies of scope
RELATED CATEGORIES
Economy




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