External economics of scale and internal economics of scale.

1. EXTERNAL ECONOMIES OF
SCALE
SUBMITTED BY :
Suvadeep Chatterjee
BATCH:(2017-19)
PNR:DM17D57

2. ECONOMICs of scale
Economics of scale refers to the phenomena of decreased per
unit cost as the number of units of production increase.
The initial investment in capital is diffused through an increase
an increase in production, and the marginal cost of producing a
good and a services decreases when each additional unit of the
production is added.
Economics of Scale means a reduction in the unit costs of a
product as a firm’s production increases.

3. Expansion of the firm itself
Efficiencies from larger scale
production
Lower long run average cost
Range of economies eg. Technical &
financial
DIFFERENCE BETWEEN INTERNAL AND EXTERNAL ECONOMIES
Benefits most / all firms
Expansion of the industry
Bundle of economies are important
Helps to explain the rapid growth of
many cities
INTERNAL ECONOMIES OF
SCALE
EXTERNAL ECONOMIES OF
SCALE

4. DEFINATION :
EXTERNAL ECONOMIES OF SCALE
•External Economies of Scale imply that as
the size of an industry grows larger or more
clustered, the average costs of doing
business within the industry fall. This may
occur due to increased specialization or labor
training, faster innovation or shared supplier
relationships.