Economics Supply And Demand Questions
Diseconomies of scale refer to the situation where a firm experiences an increase in average costs as it expands its production beyond a certain point. This occurs when the firm becomes too large and faces difficulties in managing its operations efficiently. Factors contributing to diseconomies of scale include communication problems, coordination issues, and diminishing returns to scale. As a result, the firm's average costs per unit of output increase, leading to a decrease in profitability.