Economies of scale refers to reductions in per unit costs as production increases. There are two types of economies of scale: internal, which are specific to an individual firm as it increases production, and external, which benefit an entire industry. Internal economies of scale include bulk buying, technical improvements, financial benefits, marketing advantages, better management, and cheaper transport and storage costs that a single firm achieves through expanding production.

2.  ECONOMIES OF
SCALE is that
situation in which a
firm increasing the
scale of production
 Reduces the per unit
cost of production

3.  INTERNAL ECONOMIES OF SCALE
 EXTERNAL ECONOMIES OF SCALE

4.  When a firm increases its scale of production it
enjoys several economies is called internal
economies of scale
 These economies are only firm specific
 These economies are not industry dependent

5.  Bulk buying or inventory economies
 Technical economies
 Financial economies
 Marketing economies
 Managerial economies
 Transport and storage economies

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