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The law of diminishing returns explains diseconomies of scale.
Law of Diminishing Returns
The economic principle stating that as one input variable is increased, there is a point at which the marginal gain in output begins to decrease, holding all other inputs constant.
Diseconomies of Scale
Diseconomies of scale occur when a firm's costs per unit increase as the scale of its output increases, often due to inefficiencies that arise from managing a larger organization.
- Gain insight into the basic concepts of economies and diseconomies of scale.
- Acknowledge scenarios where the contribution of resources towards production results in decreasing outcomes.
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Learning Objectives
- Gain insight into the basic concepts of economies and diseconomies of scale.
- Acknowledge scenarios where the contribution of resources towards production results in decreasing outcomes.
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