Question

4. If a firm experiences diminishing marginal productivity, does this imply that they experience diseconomies of scale? Explain.

Answer 1

more constant It is SO increasing Diseconomies of scale is the point 4. The law of diminishing marginal marginay returns states that in ang production process, adding one production unit while keeping the others will cause the overall output output to decrease. called the law of because adding one production diminishesh the marginal returns & the aver verage cost of production inevitably increases It is typically on basis because term short over longer period of time, it is virtually inevitable that other will of in production change another. way costs more unit on a of also factors one or a in Company's economies of scale are no ) roduction process when longer viable meaning that simply producing more units lead to rise in profits. There many reasons why producing more of eventually becomes unpro- will not a are the same unt

2 and of are an can table due to factors like con ordination, control, cooperation The law of diminishing returns the diseco dis economies scale are similar in the sense sense that that they both ways is which organization decrease when their production production efficiency the input increases . However the two concepts diffrent, the law significantly of diminishing returns refers to a decrease in production slutput increase in oney bakplaat input, while diseconomies are 1 as a result of an one of scale refer to an increase in cost Prea unit as a result increase in output.