Investor Glossary-economy of scaleInvestor Glossary-economy of scaleInvestor Glossary-economy of scaleInvestor Glossary-economy of scaleInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Economy Of Scale

The HTML to link to this page
 

Economy of scale (or economies of scale) fundamentally constitutes the increase in production output by way of improving production efficiency. In a fixed cost environment, economy of scale is indicative of lower-than-average cost per unit. Thus, for instance, having achieved economy of scale, the largest automobile maker may be able to produce a given car at a lower manufacturing cost than any of its competitors. Economy of scale presents outsized companies with vast geo-economic opportunities. Through economy of scale they may penetrate and secure new markets that were once beyond reach. However, economy of scale is not without limits. Having reached its optimal economy of scale and capacity for output, a company may face swelling production costs. When that happens, the economy of scale is said to enter a diseconomy of scale.



Rate this economy of scale definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: inflation, EBITDA, average price per share, current ratio, FTSE, 1035 exchange, LIBOR, annual return, deferred revenue, option premium, 401a, command economy, open position, real GDP, implied volatility, in escrow, quality assurance, cancelled check, dividends payable, covered put, stock split, 1031 exchange, class C shares, required rate of return, ex-dividend, limit order, risk management, Zero Cost Collar, reverse mortgage, minority interest, VIX, deferred tax, Key Rate Duration, margin rate, wholly-owned subsidiary, APR, 144a, diluted share, stock market close, FICO score, ex-dividend date, phantom income, per diem, debt service coverage, balance sheet, retained earnings, irrevocable trust, labor relations, liquidity ratio


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use