Sources of diseconomies of scale
A firm cannot continue to expand indefinitely or without a limit.As a firm grows or industry expands, the benefits the firm can reap or get from such growth or expansion have a limit. Any further expansion in the scale of production beyond the limit will actually create negative which would increase the cost of production. The negative effects to a firm due to its size or scale of production are referred to as diseconomies of scale. Diseconomies of scale are therefore the problems a firm experiences due to expansion. Sources of diseconomies of scale Diseconomies of scale may arise from; Managerial functions which become increasingly difficult to perform as the firm expands. Communication and consultations take more time than before. Changing consumer tastes which may not be fulfilled immediately because decision-making may take too long. Increase in the costs of transporting raw materials, components and finished products. Labour unrest or disputes and lack of commitment from the...