Lesson Plan

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Lesson Plan
Grade: Date: 18/01/2026
Subject: Economics
Lesson Topic: Internal and external economies and diseconomies of scale
Learning Objective/s:
  • Describe internal and external economies and diseconomies of scale and their impact on firm costs.
  • Explain how internal economies shift the LRAC curve downward and how diseconomies cause it to rise.
  • Analyse real‑world examples to identify sources of economies and diseconomies.
  • Apply the concepts to predict cost behaviour when a firm expands production.
  • Evaluate policy implications of external economies and diseconomies for industry planning.
Materials Needed:
  • Projector and screen for slides/diagrams
  • Whiteboard and markers
  • Handout summarising economies and diseconomies with tables
  • Printed case study of a firm’s expansion
  • Graph paper and calculators for cost‑curve sketching
  • Sticky notes for group brainstorming
 Introduction:
Begin with a quick poll: “What happens to a firm’s costs when it grows larger?” Connect to prior learning on short‑run vs long‑run cost curves, and outline that today students will identify the sources of cost advantages and disadvantages inside and outside a firm and how these shape the LRAC.
Lesson Structure:
  1. Do‑now (5’) – Short worksheet matching cost terms to definitions; teacher checks answers.
  2. Mini‑lecture (10’) – Present internal economies of scale with examples and LRAC diagram.
  3. Group activity (12’) – Analyse a case study; list internal economies, internal diseconomies, external economies, external diseconomies on sticky notes.
  4. Whole‑class discussion (8’) – Groups share findings; teacher consolidates on board linking each to LRAC shifts.
  5. Diagram construction (10’) – Students sketch the LRAC curve showing phases of internal economies, external economies, and internal diseconomies; peer‑review.
  6. Formative check (5’) – Exit ticket: “State one internal and one external factor that would cause a firm’s LRAC to rise.”
Conclusion:
Summarise that economies of scale lower average costs while diseconomies raise them, and that both internal and external forces shape the LRAC curve. Ask students to write one real‑world example of an external diseconomy on an exit slip, and assign homework to research a local industry’s economies of scale.