Answer to Question #195693 in Management for Nida

Question

Give three explanations each with examples (preferably from the South Asian markets) of the causes of economies and diseconomies of scale.

Answer 1

Diseconomies of scale occur when a corporation or corporation expands to the point that its expenses per unit rise. It occurs when a company's economies of scale no longer work. Using this theory, instead of reducing expenses while growing output, a company will observe an increase in costs as output rises. Diseconomies of scale arise when the average cost of production begins to rise in tandem with the output after economies of scale have been achieved. These can emerge as a result of management failures in managing a vast company that is growing. Employee motivation dwindles, resulting in lower production. In economies of scale, a significant company achieves economies of scale when its average production costs fall as production increases. Economies of scale can emerge for a variety of reasons. Larger companies buy raw materials in quantity, resulting in bulk pricing. The cost of advertising is spread out over a more considerable number of units. The most utmost people want to work for the most prominent companies.