ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Market has a small or niche demand
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Production of good requires high degree of personalisation
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Average cost increases as firm expands output
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MES occurs at a very large output
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Detailed explanation-1: -There are internal types of diseconomies of scale, like technical, organizational and financial diseconomies, and external diseconomies of scale, like infrastructure.
Detailed explanation-2: -Economies of scale are the advantages that can sometimes occur as a result of increasing the size of a business.
Detailed explanation-3: -The main reason as to why the firm encounters diseconomies of scale are because the expansion of firms comes with additional costs such increase the number of employed staffs and administration costs among other costs.
Detailed explanation-4: -What Is Minimum Efficient Scale (MES)? The minimum efficient scale (MES) is the lowest point on a cost curve at which a company can produce its product at a competitive price. At the MES point, the company can achieve the economies of scale necessary for it to compete effectively in its industry.