Internal economies of scale
Definition. Internal economies of scale are reductions in the long run average cost of production that arise from the expansion of an individual firm itself, as it increases its own scale of output. They accrue to the growing firm alone rather than to the industry as a whole.
Sources include technical economies from larger machinery, managerial economies from specialised staff, financial economies from cheaper borrowing, and purchasing economies from buying inputs in bulk.
This term belongs to Costs and Economies of Scale in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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