Question

Range Economies of Scale Constant Returns to Scale Diseconomies of Scale More than 400 bikes per month Fewer than 300 bikes per month Between 300 and 400 bikes per month

Answer 1

• Diseconomies of scale result from monthly bike sales of more than 400.

• Economies of scale = fewer than 300 bikes each month

• Monthly bike sales of between 300 and 400 bikes = Constant Returns to Scale.

What is Diseconomies of scale?

• Diseconomies of scale are the cost disadvantages that economic actors experience as a result of growing their organizational size or their output.
• Which leads to higher per-unit costs for the production of products and services.
• Economies of scale are opposed by the idea of diseconomies of scale.

What is Economies of scale ?

• The cost advantages that businesses experience as a result of their size of operation are known as economies of scale.
• And they are often quantified by the amount of output generated in a given amount of time.
• Scale can be increased when the cost per unit of output decreases.

What is Constant Returns to Scale?

• When a company's inputs, such as capital and labor, expand at the same rate as its outputs, or the value of their goods, this is known as a constant return to scale in economics.
• Returns to scale are measurements over a long time.

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