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What are internal economies and diseconomies of scale?

Internal economies of scale are when a firm’s long run average costs (LRAC) decrease due to increase in output/production.*This will then be shown via the LRAC decreasing and then increasing diagram.Internal economies of scale are usually of 6 types: Risk-bearing, Managerial, Financial, Purchasing, Technical, and Marketing. (I make this easy to remember by using Richard’s Mum Flies Past The Moon) – I would then explain what these mean.Diseconomies of scale are when the long run average cost increases. This is usually due to Alienation, Bureaucracy and Communication problems (I make this easy to remember by using ABC – Alienation, Bureaucracy, Communication).



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