When a company makes more products, it can save money on each item. This is called economies of scale. Here are some important reasons why this happens:

• Lower Costs: Buying materials in large amounts helps lower prices.
• Better Efficiency: When workers focus on specific tasks, they get things done faster.
• Financial Benefits: Larger companies often get loans at cheaper rates.

Over time, these things change how much it costs to run a business. Because of this, big companies can often compete better than smaller ones.