The simple meaning of economies of scale is doing things more efficiently with increasing size. Common sources of economies of scale are purchasing(bulk buying of materials through long-term contracts), managerial

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Physical and engineering basis: economies of increased dimension
Some of the economies of scale recognized in engineering have a physical basis, such as the square–cube law, by which the surface of a vessel increases by the square of the

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Economies of scale is related to and can easily be confused with the theoretical economic notion of returns to scale. Where economies of scale refer to a firm's costs, returns to scale

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Economies of scale in classical economists
The first systematic analysis of the advantages of the

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Purchasing
Firms are able to lower their average costs by buying their inputs required for the production process in bulk

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• Economies of scope
• Ideal firm size
• Long tail
• Mass production
• Network effect
• Economies of density

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External economies of scale tend to be more prevalent than internal economies of scale. Through the external economies of scale, the entry of new firms benefits all existing competitors as it

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