Key Diagrams - Long Run Average Cost (Economies and Diseconomies of Scale)
- AS, A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 20 Apr 2022
In this short video we work through the key diagram showing the long run average cost curve for a business experiencing economies of scale and (eventually) diseconomies.
We also look at the difference between internal and external scale economies.
Internal economies of scale cause a movement down the long run average cost curve for a business. Whereas external economies of scale cause a downward shift in the long run average cost curve.