Adison
Badges: 0
Rep:
?
#1
Report Thread starter 7 years ago
#1
Can someone please explain to me what are the types of internal and external economies of scale.

I've checked online but I still don't understand how managerial and marketing economies of scale reduce long run average costs and how the industry size is an external ES which also reduces long term costs.

It's still a bit confusing. I need something a clear answer

Please nothing too complex.

Also, what are diseconomies of scale?


Thanks so much
0
reply
samboJ
Badges: 11
Rep:
?
#2
Report 7 years ago
#2
(Original post by Adison)
Can someone please explain to me what are the types of internal and external economies of scale.

I've checked online but I still don't understand how managerial and marketing economies of scale reduce long run average costs and how the industry size is an external ES which also reduces long term costs.

It's still a bit confusing. I need something a clear answer

Please nothing too complex.

Also, what are diseconomies of scale?


Thanks so much
Internal economies of scale = related to the business itself
External economies of scale = related to the business AND the rest of the industry

Diseconomies of scale = opposite of economies of scale (average unit cost rises as business grows) eg. communication gets harder as businesses expand into multiple countries, managers become overworked etc.

Managerial economies of scale = business grows -> can attract higher skilled managers -> productivity improves -> reduces average costs
Marketing economies of scale = business grows -> can afford to spend more on marketing but a lesser proportion of total costs

Check tutor2u. You might want to read / make notes on this

http://www.tutor2u.net/business/gcse...s_of_scale.htm
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

Have you made your mind up on your five uni choices?

Yes, and I've sent off my application! (150)
54.74%
I've made my choices but havent sent my application yet (38)
13.87%
I've got a good idea about the choices I want to make (31)
11.31%
I'm researching but still not sure which universities I want to apply to (26)
9.49%
I haven't started researching yet (16)
5.84%
Something else (let us know in the thread!) (13)
4.74%

Watched Threads

View All