Diseconomies Of Scale

An economic concept referring to a situation in which economies of scale no longer function for a firm. Rather than experiencing continued decreasing costs per increase in output, firms see an increase in marginal cost when output is increased.

Diseconomies Of Scale

Diseconomies of scale can sometimes occur for the follow reasons:

1) A specific process within a plant cannot produce the same quantity of output as another related process. For example, if in a product required both gadget A and gadget B, diseconomies of scale might occur if gadget B is produced at a slower rate than gadget A.

2) As output increases, costs of transporting the good to distant markets can increase enough to offset any economies of scale. For example, when a firm has a large plant capable of producing a large output located in one location, the more the firm produces, the more it needs to ship to distant locations.


Investment dictionary. . 2012.

Look at other dictionaries:

  • diseconomies of scale — ➔ scale * * * diseconomies of scale UK US noun [plural] ECONOMICS, PRODUCTION ► a situation in which the cost of producing a product or providing a service increases as the total amount that is produced increases: »As they grow, some private… …   Financial and business terms

  • diseconomies of scale —   at large scale levels of output inefficienies may creep in and cause unit costs to rise …   Geography glossary

  • diseconomies of scale — Increases in the *unit costs of manufactured items in line with increases in *production levels. Contrast *economies of scale …   Auditor's dictionary

  • diseconomies of scale — /dɪsɪˌkɒnəmiz əv skeɪl/ plural noun a situation where increased production leads to a higher production cost per unit or average production cost COMMENT: After having increased production using the existing workforce and machinery, giving… …   Dictionary of banking and finance

  • diseconomies of scale — /dɪsɪˌkɒnənmiz əv skeɪl/ plural noun a situation where increased production leads to a higher production cost per unit or average production cost …   Marketing dictionary in english

  • External Diseconomies Of Scale — External factors beyond the control of a company increases its total costs, as output in the rest of the industry increases. The increase in costs can be associated with market prices increasing for some or all of the factors of production.… …   Investment dictionary

  • Scale — A bank that offers to pay different rates of interest on CDs of varying rates is said to post a scale. Commercial paper dealers also post scales. The New York Times Financial Glossary * * * scale scale [skeɪl] noun 1. [singular, uncountable] the… …   Financial and business terms

  • scale — Payment of different rates of interest on CDs of varying maturities ( maturity). A bank is said to post a scale. Commercial paper dealers also post scales. Bloomberg Financial Dictionary * * * scale scale [skeɪl] noun 1. [singular, uncountable]… …   Financial and business terms

  • Diseconomy of scale — Diseconomies of scale are the forces that cause larger firms and governments to produce goods and services at increased per unit costs. The concept is less well known than economies of scale. The rising part of the long run average cost curve… …   Wikipedia

  • economies of scale — scale effect Reductions in the average cost of production, and hence in the unit costs, when output is increased. If the average costs of production rise with output, this is known as diseconomies of scale. Economies of scale can enable a… …   Accounting dictionary

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