Question

explain internal and external saving of production function?

Answer 1

ɪɴᴛᴇʀɴᴀʟ ᴇᴄᴏɴᴏᴍɪᴇs ᴏғ sᴄᴀʟᴇ ᴍᴇᴀsᴜʀᴇ ᴀ ᴄᴏᴍᴘᴀɴʏ's ᴇғғɪᴄɪᴇɴᴄʏ ᴏғ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ ᴀɴᴅ ᴏᴄᴄᴜʀ ʙᴇᴄᴀᴜsᴇ ᴏғ ғᴀᴄᴛᴏʀs ᴄᴏɴᴛʀᴏʟʟᴇᴅ ʙʏ ɪᴛs ᴍᴀɴᴀɢᴇᴍᴇɴᴛ ᴛᴇᴀᴍ. ᴇxᴛᴇʀɴᴀʟ ᴇᴄᴏɴᴏᴍɪᴇs ᴏғ sᴄᴀʟᴇ ʜᴀᴘᴘᴇɴ ʙᴇᴄᴀᴜsᴇ ᴏғ ʟᴀʀɢᴇʀ ᴄʜᴀɴɢᴇs ᴡɪᴛʜɪɴ ᴛʜᴇ ɪɴᴅᴜsᴛʀʏ, sᴏ ᴡʜᴇɴ ᴛʜᴇ ɪɴᴅᴜsᴛʀʏ ɢʀᴏᴡs, ᴛʜᴇ ᴀᴠᴇʀᴀɢᴇ ᴄᴏsᴛs ᴏғ ʙᴜsɪɴᴇss ᴅʀᴏᴘ.

Answer 2

Concept

A production function in economics describes the technical relationship between quantities of physical inputs and quantities of products output.

Given

Production function

Find

We are asked to explain internal and external saving of production function.

Solution

Internal economies of scale are a measurement of a company's production efficiency that arise due to factors controlled by its management team. External economies of scale occur as a result of greater changes inside the sector, resulting in lower average business costs as the industry increases.