Economies of scale occur when a firm operates more efficiently as it grows larger.

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Economies of scale refer to the cost advantages that a firm can achieve as it increases its scale of production. This can be due to various factors such as specialization, better utilization of resources, and bargaining power with suppliers. As a result, larger firms can produce goods at a lower per-unit cost than smaller firms, making them more efficient and profitable.

Economies of Scale Occur When a Firm Operates More Efficiently