Economies of scale

Reductions in average costs that a business can achieve through growth, either internal to the firm or external as the industry expands.

A pull factor achieved by entering new markets, where increased output significantly lowers the average cost per unit.

A reason why variable costs do not increase linearly, as they lower average variable costs at higher outputs.

Benefits that capital-intensive production typically achieves, leading to lower unit costs at scale.

Occur when a firm's long-run average costs fall as its scale of production increases.

Cost benefits that firms can exploit through standardisation, reducing unit costs.