Business eco- theory of cost- doubt

Thread Starter

In the pdf notes only economies of scale has been explained But diseconmies of scale was not explained (except for the risk bearing point , but i didnt understood that point as well), so can u please elaborate the point that i have underlined in the image... And please give examples for managerial, commercial, and financial diseconmies(as u have already given example for technical economies)

Thread Starter

Mainly regarding technical diseconmies..

Yoga Vishnu

Technical diseconomies occur during the production process. For example, an organisation may hire many employees which leads to poor staff morale, and staff getting in each otherâ??s way. In simple words, technical diseconomies of scale can happen when a firm grows quicker than it is able to adapt

Thread Starter

Can u once define diseconmies of scale..

Thread Starter

Can u once define diseconmies of scale..

Yoga Vishnu

Keeping it simple, diseconomies of scale means the average cost is increasing with increase in output. It is a kind of disadvantage to the organisation.

Thread Starter

And also please give examples for manegerial, commercial, financial,risk Bearing diseconmies (I have understood economies but i didnt understand the diseconmies So can u please give example for each one of them other than the one mentioned in videos)(sorry for the inconvenience but i didnt understand them properly even after watching the videos twice)

Thread Starter

Can u Please give examples for these also...

Yoga Vishnu

You can go through notes PDF in free resources which have more explanation

Yoga Vishnu

1. Increased cost of management is often transferred to the company products and is likely to cause an increase in the price of goods and services offered by the company. This is treated as managerial diseconomies of scale. 2. If organization changes its long lasting supplier who gives more discounts , it result in less discounts from the new supplier. This is commercial diseconomy. 3. If organization borrows money with high interest rate, it is again considered as financial diseconomy.

Thread Starter

Ok sir Thank you I understood now And for Risk bearing ? If company take more risk and increase it production what will be the diseconmies?

Yoga Vishnu

Risk some times may work adversely which leads to diseconomies