The principle of economies of scale refers to the cost advantage that arises with increased output of a product. In the context of cloud computing, as the utilization of resources increases, the overall cost per unit of resource typically decreases, allowing for more cost-effective scaling. Leveraging economies of scale means that the retailer can scale their resources with the cloud provider, taking advantage of lower costs as their usage grows. The wrong answers miss the focus on cost optimization through scaling. Global reach is more about the geographic distribution, on-demand capacity discusses the method of provisioning, and diversification strategy is not directly related to cost savings of scaling operations.