What do you understand by economies to scale. Discuss any four internal economies of scale

Economies of scale refers to the benefits that a firm enjoys due to expanding its scale of production.

Internal economies

  • Administration: When a firm expands, its administrative expenses are distributed over greater output and the per unit cost decreases.
  • Financial: Large firms have a good reputation hence can get loans from financial institutions.
  • Marketing: Large firms sell their products easily since they are able to engage in sales promotion methods
  • Technical:  Due to their financial capacity, large firms can afford capital goods that enables them to produce superior products.

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