Differentiate between External Economies and External Diseconomies.
Answer (1)
29th Dec, 2019
Dear Student
External economies of scale happen externally i.e. not inside the organization but in within the industry. External economies reduce the average cost of the company. Since, cost per unit totally depends on the size of the industry, average cost decreases as industry size increases. The positive benefits to the firm are External economies of scale and negative externalities are known as External diseconomies of scale. A firm works on the principle of economies and diseconomies of scale. Economies and diseconomies of scale! Yes, in this section, we are going to know about more of economies and diseconomies of scale
Thanks
All the very best
External economies of scale happen externally i.e. not inside the organization but in within the industry. External economies reduce the average cost of the company. Since, cost per unit totally depends on the size of the industry, average cost decreases as industry size increases. The positive benefits to the firm are External economies of scale and negative externalities are known as External diseconomies of scale. A firm works on the principle of economies and diseconomies of scale. Economies and diseconomies of scale! Yes, in this section, we are going to know about more of economies and diseconomies of scale
Thanks
All the very best
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