If a firm gets too large, it will eventually experience both diseconomies of scale and an increase in costs associated with the learning-curve effect as cumulative volume of production grows.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm becomes too large, leading to inefficiencies and increased per-unit costs. However, the learning-curve effect typically results in reduced costs as cumulative production increases, due to improved efficiency and expertise.

If a Firm Gets Too Large, It Will Eventually Experience