Internal Economies of Scale
Cost advantages that arise from growth within a particular business, reducing average unit costs as output expands.
Formula
Average Unit Cost = Total Cost ÷ Output
Real World
Amazon's fulfilment network spreads warehouse and logistics costs across billions of orders, giving it purchasing and technical economies that small retailers cannot match.
Exam Focus
Name the specific type of internal economy (e.g. purchasing, managerial); generic answers score lower on AO2.
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