define the term economies of scale

Economies of scale are cost savings gained when a business produces more good

differentiate between internal and external economies of scale

Internal economies of scale: cost saving within a business as it grows External economies of scale: cost savings caused by the growth of the whole industry

discuss five types of internal economies of scale

1] Technical- using better machines lowers cost 2]purchasing- buying in bulk gets discounts 3]marketing]- advertising costs are spread over more products 4]financial- large firms get cheaper loans 5]managerial- specialist managers improve efficiency

Types of economies scale

1]Internal economies of scale 2]External economies of scale