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3.3.3 Diseconomies of Scale (Edexcel A-Level Economics Teaching PowerPoint)

Level:
A-Level
Board:
Edexcel

Last updated 28 Aug 2023

This editable, downloadable powerpoint covers diseconomies of scale.

Diseconomies of scale are increases in the unit (average) cost of supply in the long run due to decreasing returns to scale.

Diseconomies of scale mean that a business has moved beyond their optimum size in the long run. Businesses are suffering from productive inefficiency perhaps because of organisational slack.

Breakdowns in communication may lead to the departure of highly skilled workers from a business – this a loss of human capital for the business

Businesses then might have to raise their prices to cover increased unit costs.

Lost cost competitiveness could lead to declining market share and a fall in the share price if the business is on the stock market.

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