Definition: The ability of larger entities (governments, businesses) to produce things more cheaply per unit because they produce so many. Think of it like being able to buy in bulk if you have a larger family. Each box of detergent cost less per washload because you can buy it in bulk, and the manufacturer can save on packaging and distribution, so they pass the savings onto you. Also, it is cheaper for you because you have to run to the store less often if you buy in bulk.
Also Known As: Economies of Scale
Examples:
Wal-Mart can sell products more cheaply because its huge buying power gives it economies of scale.
