Lesson Plan

• Describe internal and external economies and diseconomies of scale and their effect on average cost.
• Explain why a firm’s cost curve shifts as production expands or contracts.
• Apply the long‑run average cost (LRAC) diagram to identify points of economies, constant returns and diseconomies for both firms and industries.

• Projector and screen
• Whiteboard and markers
• Printed handout of LRAC diagram and summary table
• Worksheet with case‑study examples
• Calculator (optional)

Begin with a quick poll: “What happens to the price of a product when a company gets bigger?” Connect this to students’ prior knowledge of bulk buying and ask them to predict cost changes. Explain that today they will identify the specific internal and external factors that create economies or diseconomies of scale and how to show them on a LRAC curve. Success will be measured by clear explanations and a correctly labelled diagram.

1. Do‑now (5'): Students write one example of a cost advantage and one disadvantage of a large firm.
2. Mini‑lecture (10'): Define internal vs. external economies/diseconomies with real‑world examples.
3. Group activity (12'): Each group receives a case study (e.g., bakery, electronics cluster) and identifies the relevant economies/diseconomies, recording them on a worksheet.
4. Diagram workshop (10'): Using the printed LRAC handout, groups plot where their identified factors would shift the curve.
5. Whole‑class discussion (8'): Groups share findings; teacher clarifies misconceptions and links to the summary table.
6. Formative check (5'): Quick quiz on key terms via Kahoot or hand‑raised responses.
7. Transition to next lesson (2'): Outline homework and preview upcoming topic on market structures.

Summarise that economies of scale lower average costs while diseconomies raise them, and that both internal and external forces shape the LRAC curve. Students complete an exit ticket stating one internal and one external factor that could move a firm from economies to diseconomies. For homework, they answer the exam‑style question about a specialised component supplier and sketch the resulting LRAC shift.