Firms may experience diseconomies of scale when
A)they are too small to take advantage of specialization.
B)large management structures are bureaucratic and inefficient.
C)there are too few employees, and managers do not have enough to do.
D)average fixed costs begin to rise again.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm grows so large that its costs per unit increase. This often happens due to bureaucratic inefficiencies in large management structures, where decision-making becomes slower and more complex.

Firms May Experience Diseconomies of Scale When