What is the definition of an internal economies of scale?

This is when due to a single firm expanding in its size they benefit from lower average costs and thus allow them to to more efficiently reach their targets such as profit maximisation. This answer is two marks and students are expected to know that this occurs only when a single firm expands in size. Students should also be using technical terms such as 'average costs' and not vague terms such as just 'costs' as examiners can easily catch people out.

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Answered by Ishaan P. Economics tutor

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