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Economies of scal occurs when there is an increase in output as cost decreases. This means, as a company will have a better chance to decrease its costs. There are two ways of achieving this, internal and external economies of scale. Internal economies of scale occurs due to the change in size of an individual firm and are not dependant on the industry as a whole. This can be achieved in two ways. 1) Firm level 2) Plant level.
External economies of scale occurs due to a growth in the industry as a whole. The individual firms need not grow, however the entire industry around them does.

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βˆ™ 14y ago
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βˆ™ 10y ago

The benefits and costs that are associated with the overall expansion of the entire industry are called as external economies. The expansion of a single firm is the internal economies of scale.

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βˆ™ 12y ago

Internal economies of scale occurs due to the change in size of an individual firm and are not dependant on the industry as a whole. This can be achieved in two ways.

) Firm level 2) Plant level.

External economies of scale occurs due to a growth in the industry as a whole. The individual firms need not grow, however the entire industry around them does.

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βˆ™ 14y ago

Internal economies of scale relate to the lower unit costs a single firm can obtain by growing in size itself.External economies of scale occur when a firm benefits from lower unit costs as a result of the whole industry growing in size.

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Q: What are the differences between internal and external economies of scale?
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