Term

define the term economies of scale

Definition

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

Term

differentiate between internal and external economies of scale

Definition

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

Term

discuss five types of internal economies of scale

Definition

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