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SCALE OF PRODUCTION/ECONOMIES OF SCALE

CONTENT

  1. Meaning of of Economies of Scale
  2. Types of Economies of Scale
  3. Internal Economies and Internal Diseconomies
  4. External Economies and External Diseconomies

 

Meaning of of Economies of Scale

By economies of scale or scale of production, we mean the growth of a firm or an industry resulting from expansion of the volume of productive capacity which leads to increase in output and decrease in its cost of production per unit of output.

Types of Economies of Scale

There are two types of economies of scale

  1. Internal economies and internal diseconomies
  2. External economies and external diseconomies

 

Internal Economies and Internal Diseconomies

Internal economies also known as the economies of large scale production are the advantages a firm derives from the expansion of its scale of production as a result of its own single efforts. In this case, as the size of the firm increases, there will be greater efficiency resulting in the fall in the cost per unit of output.

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Lesson tags: Economics Lesson Notes, Economics Objective Questions, SS1 Economics, SS1 Economics Evaluation Questions, SS1 Economics Evaluation Questions First Term, SS1 Economics First Term, SS1 Economics Objective Questions, SS1 Economics Objective Questions First Term
Back to: ECONOMICS – SS1 > First Term
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