The scale of production has an important bearing on the cost of production. It is the manufacturers’common experience that larger the scale of production. the lower generally is the average cost of production. That is why the entrepreneur is tempted to enlarge the scale of proud son so that he may benefit from the resulting economies of scale. These economies are broadly speaking of two types: Internal economies and external economies, which we shall presently consider in some detail. But before w e 0 e shall give in a summary way the economies and dis economies of large-scale.

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