Define economics of scale and explain them 2 examples

Economies of scale are when firms experience a fall in long run average costs due to the growth of the size of the company. Firstly an example is financial economies of scale. This is when a company can borrow money at a lower rate of interest due to the size and reputation of the established company making the firm a less risky customer to the bank. Another example is purchasing economies. A large firm will need a large supply of inputs thus will likely be able to negotiate a deal with the supplier as the firm may be an important part of the suppliers customer base.