DFN Inc.expanded its manufacturing plant to employ more equipment because the management of the company thought this would help them attain more sales.Unfortunately, this affected the cost of each unit produced because the company invested more finances for better equipment.This also led to a decrease in sales as customers were not willing to buy the product for an increased price.This scenario best illustrates _____.

Question

Quizplus · Accepted Answer

This scenario best illustrates diseconomies of scale, which occur when a company expands its production beyond a certain point, leading to increased costs per unit and a decrease in sales. This is often due to inefficient use of resources, such as overinvesting in equipment, as seen in this case.

DFN Incexpanded Its Manufacturing Plant to Employ More Equipment Because the the Management