Question 15
Theory of ProductionExternal diseconomies of scale result from excessive growth of
- A.the whole industry
- B.some sectors of the industry
- C.external factors
- D.internal factors.
Show the answer and explanation
Answer: A (the whole industry)
Explanation
When an industry becomes too large in one area, all its firms face congestion, labour shortages and higher input prices; these are external diseconomies.