Definition
- Diseconomies of scale
- Diseconomies of scale describe the situation where, as the level of output and the scale rise, average costs rise as well.
- Not to be confused with: Economies of scale
- Economies of scale describe the situation where, as a firm's quantity of output goes up, its cost per unit goes down.
Test yourself
What is the difference between diseconomies of scale and economies of scale?
Both describe what happens to cost per unit as a firm grows: economies mean it falls, diseconomies mean it rises.