Business Dictionary
Diseconomies of Scale
A-B C-D E-G H-K L-N O-P R-S T-W
Diseconomies of the scale refer to the phenomenon in economy where the average cost per unit produced increases as the production output decrease. In other words, as the production output increase the production costs decrease, due to reduced sale. The increase of average cost increase since the fixed costs are spread over reduced base of products sold.
The opposite effect to diseconomies of scale is the economies of scale. The economy of the scale occurs if the production volume increases, while the fixed costs are decreasing.
Related Reading:
Economies of Scale
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