c) (Dis)economies of scale

economies and diseconomies of scale

  • economies of scale

    • scale of production increases

    • increase in input < increase in output

    • cost of input < revenue from output

    • ATC decreases

  • constant returns to scale

    • increase in input = increase in output

  • diseconomies of scale

    • scale of production increases

    • increase in input > increase in output

    • cost of input > revenue from output

    • ATC increases