In the process to expand business, producers may benefit from the materialization of the economies of scale. The scale of production solely relies on the cost of production. The producers prefer to expand the scale or size of the production, as the costs can be hiked or reduced by increasing production.
The cost advantages obtained due to the scale of operation, output, and size of the enterprise is the economies of scale, which can be classified under various types as follows-
Internal Economy incurs the internal scale of a specific firm, the growth in the production from within a firm. It relates to various factors such as-