Definition

1. Noun:
   • The saving in cost of production that is due to mass production: This refers to the reduction in the average cost per unit of a good or service that occurs as the scale of production increases. It is a key economic principle where larger operations become more efficient.

Usage

• The term is used to describe the financial and operational advantages that larger companies or production runs have over smaller ones.
• It is typically used in business, economics, and manufacturing contexts.
• It is often discussed in relation to competitive strategy, market entry, and industry analysis.

Examples

• Noun:
  • The company achieved a significant economy of scale by centralizing its manufacturing, which lowered the cost per unit.
  • One major barrier for new entrants in the automobile industry is the massive economy of scale enjoyed by established manufacturers.

Advanced Usage

• "to achieve/realize economies of scale": This phrase is commonly used to describe the process of gaining these cost advantages.
  • The merger allowed the combined firm to achieve economies of scale in research and development.
• "diseconomies of scale": This is the opposite concept, where efficiency decreases and costs per unit increase as an organization grows too large.
  • The corporation's bloated bureaucracy led to diseconomies of scale, making it less agile than its smaller competitors.

Variants and Related Words

• Economies of scale (n): This is the standard plural form, acknowledging that there are multiple types or sources of cost savings (e.g., purchasing, managerial, financial).
  • The firm's global operations provided multiple economies of scale.
• Scalability (n): The ability of a system or business model to handle a growing amount of work or to be enlarged to accommodate growth, often related to achieving economies of scale.
  • The software's scalability was a key factor in its rapid adoption by large enterprises.

Synonyms

• Cost advantage: A general term for having lower costs than competitors.
• Efficiency gain: An increase in output for a given input, which can result from economies of scale.
• Mass production benefits: Directly describes the advantages of producing large quantities.

Related Concepts (Not Phrasal Verbs or Idioms)

• Minimum Efficient Scale (MES): The smallest scale of production at which the long-run average cost is minimized, representing the point where significant economies of scale have been achieved.
  • The factory was expanded to reach the minimum efficient scale for its market.
• Returns to scale: An economic term describing the rate at which output increases as all inputs are increased proportionally. "Increasing returns to scale" is closely related to economies of scale.
  • The technology sector often exhibits increasing returns to scale due to low marginal costs.

Noun

1. the saving in cost of production that is due to mass production