Differentiate between internal economies of scale and external economies of scale
Internal Economies of Scale
Internal economies of scale occur within a firm. These economies arise when the cost of producing an item that your business sells decreases as the size of your business expands. That is, as a company grows larger and larger, overall expenses are bound to Decrease. These are
- Managerial Economies
- Technical Economies
- Division of labour
- Optimum use of recourses
- Cheap credit
External economies of scale
External economies of scale occur outside of a firm but within an industry. For example, investment in a better transportation network servicing an industry will resulting in a decrease in costs for a company working within that industry. These are
- Skilled labour
- Helping industry
- Banking facility
- Research and development
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