Diseconomies of scale pdf

0
3

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. In microeconomics, diseconomies of scale are the cost disadvantages that firms and governments accrue due to increase in firm size or output, resulting in diseconomies of scale pdf of goods and services at increased per-unit costs.


This typically follows the law of diminishing returns, where further increase in size of output will result in even greater increase in average cost. This concept is the opposite of economies of scale.

The rising part of the long-run average cost curve illustrates the effect of diseconomies of scale. Ideally, all employees of a firm would have one-on-one communication with each other so they know exactly what the other workers are doing. A firm with a single worker does not require any communication between employees. A firm with two workers requires one communication channel, directly between those two workers.

The graph of all one-on-one channels is a complete graph. The number of one-on-one channels of communication grows more rapidly than the number of workers, thus increasing the time and costs of communication. An organisation with just one person cannot have any duplication of effort between employees.

If there are two employees, there could be some duplication of efforts, but this is likely to be minor, as each of the two will generally know what the other is working on. When organisations grow to thousands of workers, it is inevitable that someone, or even a team, will take on a function that is already being handled by another person or team. In colloquial terms, this is described as “one hand not knowing what the other hand is doing”. CAM systems: CADANCE was designed by the GM Design Staff, while Fisher Graphics was created by the former Fisher Body division.