If the production of a large firm is higher than that of a small firm, it is experiencing.

If the production of a large firm is higher than that of a small firm, it is likely experiencing internal economies of scale. This means that as the firm grows and produces more, it benefits from lower average costs due to factors such as specialization, better technology, and more efficient use of resources. Essentially, the larger firm is able to spread its fixed costs over a larger output, which results in lower average costs per unit produced. On the other hand, if a firm's production increases and its costs per unit of output also increase, it may be experiencing internal diseconomies of scale. This could happen due to factors such as communication problems, bureaucracy, or inefficient management. External economies and diseconomies of scale refer to the impact of industry-wide factors on a firm's costs. If the production of all firms in the industry increases and they all benefit from lower costs, then there are external economies of scale. Conversely, if an increase in production leads to higher costs for all firms in the industry, then there are external diseconomies of scale.