What do we mean by economies of scale?
Economy
An economy can be defined as the organizational system of an industry or trade-in a country or a particular region. It refers to the proper use of money, time and resources to achieve a certain outcome. An economy can be broken down into macroeconomics and microeconomics. Microeconomics focuses on studying the behaviour of a business or a specific individual, whereas macroeconomics focuses on the economy as a whole.
Answer to the Question
Economies of scale can be defined as a state whereby the production of goods or service can be done on a large scale, using less input cost. This means that, as a company grows and advances, its production units get to grow too and stands a better chance to reduce the costs it spends on production. Scale economies are determined by the amount of output produced, the cost per unit of production decreases with a rise in volume