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economy of scale

noun
1.
(economics) a fall in average costs resulting from an increase in the scale of production
Collins English Dictionary - Complete & Unabridged 2012 Digital Edition
© William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins
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Encyclopedia Article for economy of scale

in economics, the relationship between the size of a plant or industry and the lowest possible cost of a product. When a factory increases output, a reduction in the average cost of a product is usually obtained. This reduction is known as economy of scale. Increased labour supply, better specialization, improved technology, and discovery of new resources or better implementation of existing ones all can increase output and lead to economy of scale. Conversely, diseconomy of scale can result when an increase in output causes the average cost to increase.

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Encyclopedia Britannica, 2008. Encyclopedia Britannica Online.
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