Economies of Scale
The reduced costs per unit that arise from increased total output of a product. For example, a larger factory will produce power tools at a lower unit price, and a larger medical system will reduce cost per medical procedure.
Origin
Adam Smith described the underlying idea in his 1776 Wealth of Nations, using the famous pin factory example to show how division of labor multiplied output. Alfred Marshall formalized the concept in his 1890 Principles of Economics, coining the terms "internal economies" and "external economies" to classify how firms and industries achieve cost advantages at scale. Earlier, Charles Babbage had analyzed manufacturing efficiencies in his 1832 On the Economy of Machinery and Manufactures.
Everyday Use
It's why a single coffee from a cafe costs three dollars but making a pot at home works out to pennies per cup. Bulk buying, shared infrastructure, and spreading fixed costs across more units all drive down the price of each one. Every subscription service, warehouse store, and factory assembly line is built on this principle.