Economies and diseconomies of scale

IB Business Management: Economies and diseconomies of scale

Economies of scale enable a business to benefit from lower average costs (the cost per unit) by increasing the size of its operations. Hence, these are often described as the cost-saving benefits enjoyed by a firm as it grows.However, diseconomies of scale will occur if the firm growths beyond its ability to operate efficiently. This causes the firm’s average costs of production to rise due to problems such as miscommunication,...

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