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Economics vocabulary · Markets, Supply and Demand

Economies of scale

Meaning in economics, with examples

nounCommon term

In economics, economies of scale means: The cost savings a firm gets as it grows: when it produces more, the average cost of each unit falls.

In Turkish: ölçek ekonomileri

How it is used

Always plural. Big firms benefit from, achieve or exploit economies of scale through bulk buying, specialised machines and spreading fixed costs over more output. When a firm grows so big that costs rise again, economists speak of diseconomies of scale.

Example sentences

  1. Large supermarket chains enjoy economies of scale that small shops cannot match.

  2. Carmakers need economies of scale to cover the huge cost of new factories.

Common collocations

  • achieve economies of scale
  • benefit from economies of scale
  • diseconomies of scale
  • economies of scope
  • marginal costThe extra cost of producing one more unit of a good or service; a key idea when a firm decides how much to produce.
  • monopolyA market in which a single firm is the only seller of a product with no close substitutes, which gives it the power to set prices.
  • oligopolyA market controlled by a small number of large firms, so each firm's decisions on prices and output affect the others.
  • productivityHow much output is produced from a given amount of input, most often measured as output per worker or per hour worked.

More terms: Markets, Supply and Demand

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