Diseconomies of scale occur when a business grows so large that the cost per unit increases. This happens when the advantages of scale are outweighed by inefficiencies, leading to higher operational costs.
Example: If BIB expands too rapidly and has difficulty managing the increased complexity of operations, communication issues and bureaucratic delays might arise. This could lead to inefficiencies such as slower decision-making and higher administrative costs, ultimately increasing the cost per unit produced.
« Back to Glossary Index