Economies of Scale
Returns to scale is the result to economics of scale.Firms get economics of scale wish the expansion of output. economics refers to the saving in per unit cost as output increase.
Economics scale are classified in to two groups:-
1.Internal economics of scale.
2.External economics of scale.
1. Internal economics of scale:-
Economics that accrue to a firm out of its internal situation when its scale are termed as internal economics. Internal economics of a firm are independent of the action of other firm. They are internal in the sense that they are limited to a firm when its output increases. They are not shared by other firms in the industry.
2. External economies of scale
Economics which accrue to the firms as a result of the expansion in the output of the whole industry are termed as external economics. They are external in the sense that they are accrued to the firm not out of its internal situation , but from outside it. i,e. from expansion of the industry.
Returns to scale is the result to economics of scale.Firms get economics of scale wish the expansion of output. economics refers to the saving in per unit cost as output increase.
Economics scale are classified in to two groups:-
1.Internal economics of scale.
2.External economics of scale.
1. Internal economics of scale:-
Economics that accrue to a firm out of its internal situation when its scale are termed as internal economics. Internal economics of a firm are independent of the action of other firm. They are internal in the sense that they are limited to a firm when its output increases. They are not shared by other firms in the industry.
2. External economies of scale
Economics which accrue to the firms as a result of the expansion in the output of the whole industry are termed as external economics. They are external in the sense that they are accrued to the firm not out of its internal situation , but from outside it. i,e. from expansion of the industry.
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