**Internal and External Economies and Diseconomies of Scale and their Impact on Long Run Average Cost (LAC) Curve and Short Run Average Cost (SAC) Curve**

**Internal Economies and Diseconomies of Scale**

Internal economies of scale refer to the cost advantages that a firm can achieve as it increases its scale of production within its own operations. These cost advantages can arise due to various factors such as increased specialization, improved technology, better resource allocation, and increased bargaining power with suppliers. As a result, the average cost of production decreases.

Diseconomies of scale, on the other hand, occur when the firm's average cost of production increases as it expands its scale of operations. This can happen due to various reasons such as increased coordination and communication difficulties, bureaucratic inefficiencies, and decreased motivation and coordination among employees.

**Impact on Long Run Average Cost (LAC) Curve**

The Long Run Average Cost (LAC) curve represents the relationship between the average cost of production and the scale of operations in the long run. It is derived by combining various short run average cost curves.

Internal economies of scale have a significant impact on the LAC curve. As a firm experiences internal economies of scale, its average cost of production decreases. This results in a downward sloping LAC curve, indicating that as the firm increases its scale of operations, it can achieve lower average costs.

Similarly, diseconomies of scale have an impact on the LAC curve. As a firm experiences diseconomies of scale, its average cost of production increases. This leads to an upward sloping LAC curve, indicating that beyond a certain point, the firm's average costs start to rise as it expands its scale of operations.

**Impact on Short Run Average Cost (SAC) Curve**

The Short Run Average Cost (SAC) curve represents the relationship between the average cost of production and the scale of operations in the short run, where some factors of production are fixed and cannot be adjusted.

Internal economies and diseconomies of scale do not have a direct impact on the SAC curve. In the short run, a firm's average cost of production is influenced by factors such as the level of fixed costs, the level of variable costs, and the level of output. While internal economies and diseconomies of scale can affect the firm's long-run cost structure, they do not directly impact the short-run average cost curve.

**Conclusion**

To summarize, internal economies and diseconomies of scale have a significant impact on the Long Run Average Cost (LAC) curve, as they determine the average cost of production at different levels of output. However, they do not have a direct impact on the Short Run Average Cost (SAC) curve, as the short-run cost structure is influenced by other factors such as fixed costs, variable costs, and output level.