Define what is meant by Economies of Scale and list and outline any 3 factors that would contribute to positive returns to scale (economies of scale) for a firm.Firms can experience both internal and external economies of scale

Internal Economies of Scale are economies or benefits which accrue from the increase in the scale of output of an individual firm and they provide benefits to that firm alone. They are usually classified as:
(1) Technical Economies of Scale.
(2) Marketing Economies of Scale.
(3) Financial Economies of Scale.

External Economies of Scale are benefits which accrue from the growth of an industry and thus may be availed of by all firms in the industry.
Examples are:

1. Specialised firms establishing to support the industry.
2. Cost of research being shared among firms.
3. Higher Education Institutions delivering programmes targeted to assist employees.
4. The establishment of marketing boards and other specialized agencies to assist the industry.

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