External economies of scale occur when all firms in an industry are able to benefit from lower long-run average costs.
For example, if the government announced a scheme which encouraged more people to
When firms become larger and larger, they are impacted by both economies of scale and diseconomies of scale at the same time. After a point, diseconomies of scale will outweigh economies of scale.
Large firms are able to benefit from economies of scale. This is when long-run average costs fall as output increases. Risk-bearing, financial, marketing, technical, managerial, and purchasing are the main types of economies