Diseconomies of scale result from a high level of competition in a market.

Question

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Diseconomies of scale refer to the increase in unit costs as a firm grows in size beyond a certain point. This can result from factors such as communication breakdowns, difficulty in coordinating activities, and diminishing returns to specialization. While competition may be a factor that affects a firm's cost structure, it is not the direct cause of diseconomies of scale.

Diseconomies of Scale Result from a High Level of Competition