These only occur in the long run and allow a business to know whether it would improve its efficiency by increasing input levels. Economies and diseconomies of scale occur because of the idea of ​​increasing and decreasing returns to scale. Economies of scale explain why an increase in inputs will lead to a more than proportional increase in outputs. External economies of scale are those that occur due to the advantages of being in a market (for example, if logistical links improve due to a concentrated geographic market, then this is an economy external scale), while internal economies of scale occur due to an increase in the size of an individual company (for example, if two companies merge and therefore have better specialized managers for each department, this is called a managerial economy of scale). On the other hand, diseconomies of scale occur due to communication problems (for example, if a company has decentralized management, it may not be able to control the increase in average costs). Through the concept of economies and diseconomies of scale, businesses are able to better assess whether they can grow efficiently in order to achieve their growth goals while keeping costs at a level of productive efficiency. Using cost theory means businesses can predict the effect changes in their inputs will have on their operations.