economies of scale
/ɪˈkɒnəmiz ɒv skeɪl/
Meaning
The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing as fixed costs are spread over more units of production.
Examples
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By building a larger factory, the company achieved significant economies of scale and lowered retail prices.
By building a larger factory, the company achieved significant economies of scale and lowered retail prices.
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Small businesses often struggle to compete with multinational corporations that benefit from massive economies of scale.
Small businesses often struggle to compete with multinational corporations that benefit from massive economies of scale.
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The merger was designed to exploit economies of scale in both manufacturing and distribution.
The merger was designed to exploit economies of scale in both manufacturing and distribution.
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As production volume increases, economies of scale allow us to improve our profit margins.
As production volume increases, economies of scale allow us to improve our profit margins.
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Online retailers leverage economies of scale to offer free shipping on most orders.
Online retailers leverage economies of scale to offer free shipping on most orders.
Common Mistakes
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✗ We gained economy of scale by ordering in bulk.
✓ We achieved economies of scale by ordering in bulk.
The term is almost always plural ('economies') and is typically used with verbs like 'achieve', 'realize', or 'exploit' rather than 'gain'.
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✗ The big company has an economy of scale.
✓ The large company benefits from economies of scale.
We say a company 'benefits from' or 'achieves' economies of scale, rather than 'having' it as a singular possession.
Related Expressions
Practice
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As the factory ramped up production, ________ kicked in, reducing the cost per unit by thirty percent.
💡 Cost advantages gained by size/volume.
Show answer
economies of scale
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Global corporations use ________ to price out local competitors.
💡 Plural term for cost savings through large-scale operations.
Show answer
economies of scale