As economies of scale (economies of size, economies of scale) we understand in the production-technical area the relationship of output quantity with the amount of factors of production used for this.
Brief description
Economies of scale show up in the course of primarily mass production and the production of larger batches. In doing so, the fixed costs of production are divided among a large number of final products, so that the total costs per unit of product can be reduced. This means that the total costs per piece of each additional single unit produced, decreases and approaches the variable costs. The total cost function thus runs in a degressive manner, by which this effect is also referred to as fixed cost degression.
