Differentiate between external economies of scale and external-00566
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vu cs401 Computer Architecture and Assembly Language Programming.
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vu cs401 Mid Term Solved Past Paper No. 4.
External economies
These are the benefits which are accured to any firm in the presence of other firms. For example setting of credit information bureaus by bank , advertising by industry such as rival industry.
Discovery of new techniques.
This type of economy occurs when an industry is heavily concentrated in a particular area.
Economies is available to all firms for example construction of roads
External diseconomies of scale
These are the forces which causes the large firms to produce goods and services at increased per unit costs.
This type of scale occurs when an industry grows larger and shortage of skilled laor taking place and shortage of raw materials are the types of external diseconomies.
When a firm become large then supervision of workers become difficult and problem is created for management is taking place which cause adverse effect on efficiency.
