economy of scale

Definition

Reduction in cost per unit resulting from increased production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls.

Use economy of scale in a sentence

You should try and have an economy of scale any time you think that you need to down size some.

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The economy of scale was important because it talked about the reduction in cost per unit and would result in an increased production.

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They knew the cost of the machine was expensive, but they also realized they could benefit from an economy of scale and that extra volume would cover the cost in the long run.

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banker's bank increasing returns to scale