What is Economies of scale?

The decrease in the average cost per unit of output as the volume of production grows. The main reasons: fixed costs (rent, equipment, management) are spread over more output, raw materials are bought more cheaply in large volumes, and the division of labour and specialisation increase efficiency. The reverse also happens: if a company grows excessively large and becomes hard to manage, average cost may rise again (diseconomies of scale).

Source: Britannica Money: economy of scale; UN ESCWA glossary: economies of scale