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The concept you're referring to is known as economies of scale. Economies of scale occur when a business achieves cost advantages due to the scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

There are two main types of economies of scale:

1. Internal Economies of Scale: These are cost reductions that occur within the firm as it grows larger. They can result from factors such as:
   - Improved production techniques and technology.
   - Greater specialization of labor.
   - Bulk purchasing of materials at discounted rates.
   - Enhanced bargaining power with suppliers.
   - More efficient use of resources.

2. External Economies of Scale: These are cost reductions that occur outside the firm, often due to the overall growth of the industry or improvements in the industry’s infrastructure. They can result from factors such as:
   - Development of better transportation networks.
   - Advances in industry-specific technology.
   - Formation of industry clusters or business hubs.

As businesses expand their production, they can benefit from reduced average costs, allowing them to sell their products at lower prices while maintaining profitability. This concept is fundamental in understanding how businesses grow and how markets operate, influencing decisions related to production, pricing, and competition.