Diseconomies of scale Flashcards
1
Q
Define diseconomies of scale
A
occur for a firm when an increase in the scale of production leads to production at higher long-run average cost
2
Q
Define internal and external diseconomies of scale
A
Internal- expansion of given firm
external- development of industry in which the firm is operating in
3
Q
3 examples of diseconomies of scale
A
-Control
Mangers find it harder to control what workers do due to the complexity of monitoring large numbers of workers
-Coordination
Mangers find it harder to coordinate the activities of workers and between teams due to the complexity of communicating with large numbers of people
-Cooperation
Workers in large firms may develop a sense of alienation and loss of morale if they don’t feel listened to
