Term that describes when multiple (usually similar) products can be produced in a facility less expensively than a single product.

The principle that tells when the range of products rises then the expense of producing items itself declines is calledeconomies of scale.

Let’s imagine you are the textile producer. You produce both men’s and women’s clothes. Adding children’s clothes would boost economies of scale because the same production material, suppliers, warehouses, and distribution routes could be used to create a new product line. This will lower the cost of production for all of your clothes even further.

The cost of producing all the three distinct lines is less than if three of the three different companies each produce men’s, women’s, and children’s clothes. You can continue to reduce expenses by extending the usage of your resources to create more items that are marketed to the same target market.