The difference between internal and external economies of scale
Economies of scale are cost advantages a firm gains as it grows. Internal economies come from inside the firm itself. External economies come from the growth of the whole industry.
Real World
IKEA benefits from internal economies through bulk purchasing timber globally, while Swedish furniture firms collectively benefit from external economies via specialist logistics networks clustered around Älmhult.
Exam Focus
Distinguish clearly: internal = firm-specific decisions; external = industry-wide growth. Examiners penalise conflation of the two.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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