Meaning of economies of scale | Babel Free

Definitions

The characteristics of a production process in which an increase in the scale of the firm causes a decrease in the long run average cost of each unit.

plural, plural-normally

Equivalents

Examples

“When plant size increased from 400 heavy young hens per hour to about 1,500 per hour average costs per pound declined from 6.6 to 5.4 cents per pound. While these costs suggested the existence of economies of scale in processing, they did not provide a standardized measure of the exact nature and extent of potential cost savings.”

“In the 1930s, Brandeis argued that large companies would inevitably exploit their workers, convert their profits into political influence, and corrode both the market and the machinations of government. But the Reagan administration and subsequent lawmakers have allowed vertical and horizontal integration on the theory that economies of scale often benefit both employees and consumers.”

“To exploit travel economies of scale, RAIL buys a four-in-eight-day Rail Rover. This is now known as the 'Spirit of Scotland Travelpass', although older users may remember it as the 'Freedom of Scotland' - arguably a better name.”

CEFR level