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WAEC Economics 2020 Question 17

Question 17

Theory of Production

A large firm may experience diseconomies of scale if there is

  1. A.difficulty in coordinating decisions.
  2. B.division of labour in production.
  3. C.employment of more specialists.
  4. D.decrease in the cost of production.
Show the answer and explanation

Answer: A (difficulty in coordinating decisions.)

Explanation

When a firm gets too big, management and coordination become difficult and raise unit costs.