What are diseconomies of scale and why might they occur?
What will be an ideal response?
Diseconomies of scale mean that as the firm increases all its inputs by the same percentage, its output increases by a smaller percentage. As a result, the firms' long-run average cost rises. Diseconomies of scale can arise from the sheer size of a firm. As a firm grows larger, it becomes increasingly more difficult to manage. Communicating information up and down the management hierarchy as well as communicating between managers and workers on the same level becomes more costly. As a result, the firm experiences diseconomies of scale, that is, its long-run average cost increases as it expands the scale of its operation by producing yet more output.
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All else constant, there is an inverse relationship between the price elasticity of demand and the marginal revenue resulting from a decrease in price
Indicate whether the statement is true or false
Because these securities are more liquid and generally have smaller price fluctuations, corporations and banks use the ________ securities to earn interest on temporary surplus funds
A) money market B) capital market C) bond market D) stock market