Define Economies of Scale stating an instance when this might occur.

This is when a company's costs decrease as a result of increased production. This may occur when two companies decide to merge in order to grow the business by pooling their individual resources. As a result of this, production of goods and services can be increased, while at the same time reducing the overall costs proportionately. This reduction of costs may come from one of the merging companies being a raw materials producer, resulting in a cheaper cost of production. In this case the company is said to benefit from economies of scale.