Which of the following is a reason why a firm would experience diseconomies of scale?
A)To finance an increase in the size of its plant, a firm must borrow more money or sell more shares of stock.
B)As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations.
C)As the size of the firm increases, it becomes more difficult to coordinate the operations of its manufacturing plants.
D)As the size of the firm increases, it must operate in other countries where differences in language, customs, and laws increase its average costs.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when the firm experiences difficulty in coordinating and managing its operations as it grows larger. This may lead to inefficiencies, communication breakdowns, and other issues that increase costs and decrease productivity. Option A refers to financing concerns, which may be a factor in some cases but do not necessarily lead to diseconomies of scale. Option B refers to market saturation, which may limit growth opportunities but does not necessarily cause diseconomies of scale. Option D refers to international expansion, which may introduce additional costs and challenges but does not by itself lead to diseconomies of scale.

Which of the Following Is a Reason Why a Firm