External diseconomies of scale are caused by internal management problems when firms get very large.

Question

Quizplus · Accepted Answer

External diseconomies of scale are caused by external factors such as traffic congestion, increased competition for resources, and rising prices of inputs. They are not caused by internal management problems. Internal management problems can lead to internal diseconomies of scale, where a firm's internal organization becomes inefficient as it grows larger.

External Diseconomies of Scale Are Caused by Internal Management Problems