If this happens, efficiency in the various departments will fall which will lead to a rise in average cost. Internal economies of scale IEOSor simply known as economies of scale EOSrefer to the decrease in average cost when the scale of production expands.
If this happens, the researches conducted by these researchers will be published in research journals and be made accessible to interested parties for a fee. An expansion of the industry may induce the government to improve the infrastructure such as the transportation network to support the industry.
Managerial Economies of Scale Larger firms may be able to afford to create more specialised departments where specialists perform specific administrative functions. The size of a firm is often measured by its long-run output level which depends to a large extent on the minimum efficient scale.
Economies of scope occur due to several reasons. External economies of scale EOS refer to the decrease in average cost when the industry rather than the scale of production expands.
If this happens, firms in the industry will experience a fall in their training costs which will lead to a fall in their average costs. Therefore, larger containers have a bigger volume relative to surface area and hence larger firms that use larger containers have a lower container cost per unit of output which will lead to a fall in their average costs.