c) Internal and external

• define internal (dis)economies of scale

• define external (dis)economies of scale

• (dis)economies of scale caused by a firm growing larger

• (dis)economies of scale caused by an industry growing larger

• state examples of internal economies of scale

• specialisation

  • more workers → specialised workforce

• improved finance

  • lower interest rates

  • purchasing economies → cheaper bulk-buying

• cost distribution

  • cost or production spread over a larger number of sales

• state examples of internal diseconomies of scale

• low communication/bureaucracy

  • multiple layers of management communicate slower

• low coordination

  • larger workforces are harder to control/organise efficiently

• state examples of external economies of scale

• improved transportation

  • high load capacity + low fuel and cargo prices

  • expanded access to factors of production

• increase in the skilled labour pool

  • low wages + low recruitment and training costs

• state examples of external diseconomies of scale

• geographical cluster

  • high competition for skilled labour → high wages

  • high demand for space → high rent prices

• infrastructure strain

  • high demand for local transportation → traffic congestion