Chapter 15: Economies and Diseconomies of scale

Diti Goswami

NMIMS Bangalore

October 14, 2022

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Economies and Dis-economies of Scale

Economies of scale the property whereby long-run average total cost falls as
the quantity of output increases
Dis-economies of scale the property whereby long-run average total cost
rises as the quantity of output increases
Constant returns to scale the property whereby long-run average total cost
stays the same as the quantity of output changes

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What might cause economies or diseconomies of scale?

Economies of scale: higher production levels allow specialization among

workers, which permits each worker to become better at a specific task.
Diseconomies of scale: because of coordination problems that are inherent
in any large organization.

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Presentations

Lessons from a Pin Factory

Case Study: Monster.com: Success Beyond the Bubble

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 Acknowledgement

Thank you!

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