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Diseconomies of Scale
(redirected from Diseconomy of Scale)

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Diseconomies of Scale
The decrease of efficiency in the making of a product by producing more of it. That is, diseconomies of scale occur when a company increases its output for a product such that it increases the cost per unit of the product. For example, assume that labor costs at a factory are constant as long as the factory produces between 100,000 and 500,000 units per month. If the factory produces more than 500,000 units per month, it may have to hire more workers, which would increase the cost per unit. It is easier for smaller companies to fall into diseconomies of scale because they have less control over their costs; indeed this can cause many smaller companies to be at a significant competitive disadvantage. See also: Economies of Scale.


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Taking on huge debt can trigger a diseconomy of scale and lead to economic ruin for small producers.
One possible explanation of this apparent anomaly is that the increasing economies of scope observed in public IHEs between undergraduate education and research and graduate education overwhelm the product-specific diseconomy of scale.
A diseconomy of scale became apparent when I analyzed data from the American Hospital Association's 1982 Guide to Hospitals.
 
 
 
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