Asked by
Moody’s Channel
on Dec 19, 2024Verified
Diseconomies of scale are caused by the law of diminishing marginal returns.
Diseconomies of Scale
Diseconomies of scale occur when a company or business grows so large that the costs per unit increase, leading to decreased efficiency.
Diminishing Marginal Returns
A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit will eventually decrease.
- Comprehend the idea and consequences of economies and diseconomies of scale.
Verified Answer
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Learning Objectives
- Comprehend the idea and consequences of economies and diseconomies of scale.