Economics • Economic BasicsEasy
What is meant by 'Internal Economies of Scale'?
A. Cost reductions resulting from the growth of the entire industry.
B. Cost advantages that an individual firm experiences as it increases its own output scale.✓ Correct Answer
C. Tax benefits provided by the government to domestic manufacturers.
D. Reductions in trade barriers between two countries.
💡 Solution & Explanation
Internal economies of scale describe the cost advantages realized exclusively by an individual enterprise as it expands its own operational size and production capacity. Distractors referring to industry-wide cost shifts instead define external economies of scale. Understanding these microeconomic concepts helps analyze firm growth patterns in competitive markets.
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