Which of the following is the most likely cause of diseconomies of scale?
A)Increasing returns to scale.
B)A small scale of operations and output.
C)Low productivity.
D)Bureaucracy.

Question

Quizplus · Accepted Answer

Bureaucracy, or excessive bureaucracy, is the most likely cause of diseconomies of scale. As the scale of operations increases, the number of bureaucratic procedures and layers of management can grow too large and slow down decision-making processes. This can lead to inefficiencies, increased costs, and reduced productivity, all of which are characteristics of diseconomies of scale. Increasing returns to scale and a small scale of operations would actually lead to economies of scale, while low productivity may be a consequence of diseconomies of scale, but not the cause.

Which of the Following Is the Most Likely Cause of Diseconomies