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 Form 3 Business Studies: Size and location of a firm lessons

Meaning and types of economies of scale

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Answer Text:
Economies of scale and what it consists of :
-Economies of scale refer to benefits which accrue to a firm due to the increase of its scale of production. They are advantages enjoyed because of expansion of a firm.
Types:
-internal economies of scale
-External economies of scale.
Internal economies of scale:
-refer to benefits that a firm enjoys when it expands its output or enlarges its scale of production.
-this results to reduction of costs
It consists of :
1. Technical economies of scale
2. Managerial economies of scale
3. Marketing economies of scale
4. Financial economies of scale
5. Risk bearing economies of scale
6. Welfare economies of scale
7. Research economies of scale.


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