(a) Define EACH of the following terms

*Internal Economies of Scale- This refers to the benefits that one particular firm receives arising out
of large scale production.

*Internal Diseconomies of Scale- These are the disadvantages or problems received by a

particular firm arise out of large scale production.

(b) Identify TWO Internal Economies of Scale: Technical economies of scale

Financial economies of scale
© Explain how TWO Different Internal Economies of Scale can lead to lower costs in
production- * Technical economies of scale – These are benefits that come from increased
outputs through greater division of labor as workers become expert in their job resulting in lower
costs of production.

* Financial economies of scale - The large firm is in a more favorable position to

raise finances to engage in expansion than small firms. This is so if the firm is well known and is
a better credit risk than smaller firms. The large firm may also raise money at lower cost since
potential investors have confidence in them buying shares in the company.
(d) (I) Unfortunately, implementing new technology could mean the loss of jobs, especially
when automated processes can perform the same work more cheaply than humans. Remaining
employees may resent your actions or even fear they could be next, creating a reduction in
morale throughout your company.

(ii) *Human can undergo special training that allows them to cater to their task in their job that
mimics the efficiency of a machine.

*Since large machine and equipment are difficult to maintain job salaries can be reduced slightly
as opposed to laying off workers for machines and they work in place of the technology to
maintain a morale throughout the company.
(e) Pollution - Heavy industrial production for example steel and bauxite production may cause
noise and air pollution correspondent with expansion, However, making a switch to clean energy
sources will no doubt eradicate this problem since energy generated from solar and wind
contribute no air pollution whatsoever.