AP MicroeconomicsProduction & Costs
Diseconomies of Scale
Diseconomies of scale occur when long-run average total cost increases as output increases.
This results from coordination problems, communication breakdowns, or bureaucracy as a firm becomes too large. It causes per-unit costs to rise, reducing efficiency and profitability at higher output levels.
Interactive graph
Production Costs →
Drag the curves and see it for yourself.
Study module
Production and Costs →
Full lesson, practice questions, and flashcards.