When a firm becomes so large it is difficult to coordinate and control,it is most likely that
A) economies of scale have begun.
B) diseconomies of scale have begun.
C) average total cost begins to fall.
D) long-run average costs become negative.
E) there is increasing marginal returns to increasing the firm's plant size.

Question

Quizplus · Accepted Answer

When a firm becomes so large that coordination and control become difficult, it is a sign that diseconomies of scale have begun to occur. This can happen as the firm's size increases beyond a certain point, causing communication and coordination problems, bureaucratic inefficiencies, and difficulties in monitoring employees and operations. As a result, costs begin to rise instead of fall, leading to diminishing returns and reduced profitability.

When a Firm Becomes So Large It Is Difficult to Coordinate