Final answer:
Economies of scale refers to the idea that as the quantity of output goes up, the cost per unit goes down. This can be seen in larger companies or factories, which can produce at a lower average cost compared to smaller ones.
Step-by-step explanation:
The idea behind economies of scale is that the higher the number of output produced, the fewer assets are required to maintain a given level of revenue. As the quantity of output increases, the cost per unit decreases. This means that larger factories or companies can produce at a lower average cost compared to smaller factories or companies.