Asked by Karen Macauley on Jun 15, 2024
Verified
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.
Diseconomies of Scale
The phenomenon where production costs increase as a company grows larger, leading to reduced efficiency.
Bureaucratic
Pertaining to a system of administration characterized by strict policies, procedures, and hierarchy.
- Understand the impact of specialization and coordination issues on a company's expenses.
Verified Answer
CE
Chloe EastridgeJun 20, 2024
Final Answer :
B
Explanation :
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.
Learning Objectives
- Understand the impact of specialization and coordination issues on a company's expenses.
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