Which of the following is an example of diseconomies of scale?
A) As the computer industry has expanded, demand for professionally trained computer programmers has also increased, which has caused the salaries of computer programmers to increase.
B) As a firm hires additional workers, each worker adds less to total output than the previous worker.
C) A firm increases in size and is therefore able to lower its health insurance costs because as the size of the group insured increases, the premium per person decreases substantially.
D) As the demand for calculators decreased, the price of calculators actually rose.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a company or business grows so large that the costs per unit increase. Choice A is an example of diseconomies of scale because as the computer industry expands, the increased demand for computer programmers leads to higher salaries, which increases the cost of labor for companies in the industry.

Which of the Following Is an Example of Diseconomies of Scale