Diseconomies of scale
Definition. Diseconomies of scale arise when a firm long run average cost rises as it expands its scale of production beyond a certain point, so that increasing output makes each unit more costly. They cause the long run average cost curve to slope upward after the minimum efficient scale.
They commonly stem from managerial and coordination difficulties, communication failures and weakened worker motivation in very large organisations. They set a limit on the size beyond which growth is inefficient.
This term belongs to Costs and Economies of Scale in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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