Question

What is the main source of diseconomies of scale? A Physical capital breaking more often with large output levels B Specialization of capital and labor C Limited ability to manage and coordinate larger amounts of inputs D Workers getting fatigued

Answer 1

Answer:

C. Limited ability to manage and coordinate larger amounts of inputs.

Explanation:

Diseconomies of scale: It is a situation when the average cost of production decreases as the output increases due to increase in the size of the organization and it become difficult and costly to coordinate or manage worker or other inputs. It also causes diminishing marginal product in the long run. It is opposite of economies of scale. Diseconomies arise due to use of unskilled laborer and outdated technologies for production.