Diseconomies of Scale
Rising long-run average costs despite increased production.
Formula
Average Cost = Total Cost / Output
Real World
When Tesco expanded aggressively in the 2010s, its management layers became so bloated that decision-making slowed and costs rose — a textbook case of diseconomies of scale.
Exam Focus
Always distinguish diseconomies from diminishing returns — diseconomies are long-run; examiners penalise conflating the two.
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