The transition from economies of scale to diseconomies of scale:
A) is more likely to occur in a service operation.
B) is more likely to occur in a manufacturing operation.
C) is more likely to occur when utilization is low.
D) contains the point at which average unit costs are at their lowest.

Question

Quizplus · Accepted Answer

The transition from economies of scale to diseconomies of scale contains the point at which average unit costs are at their lowest. This means that as production increases, the average cost per unit will decrease up to a certain point, after which it will start to increase as a result of factors such as increased complexity, coordination difficulties, and management issues. This point represents the transition from economies of scale to diseconomies of scale.

The Transition from Economies of Scale to Diseconomies of Scale