diseconomies of scale

  

Definition

Increase in long-term average cost of production as the scale of operations increases beyond a certain level. This anomaly may be caused by factors such as (1) over-crowding where men and machines get in each other's way, (2) greater wastage due to lack of coordination, or (3) a mismatch between the optimum outputs of different operations. See also economies of scale.

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  • The diseconomies of scale were reason enough to suggest we exit the industry so we passed on our recommendation to senior management.

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  • You may have to raise the price on your product if the diseconomies of scale gets out of hand and is costing to much.

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  • Your customers may not like it but you may have no choice but to raise prices if there is a diseconomies of scale.

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