Get premium membership and access revision papers with marking schemes, video lessons and live classes.
Processing. Please wait.

 Form 3 Business Studies: Size and location of a firm lessons

External diseconomies of scale and their examples

 (4m 53s)
810 Views     SHARE

Download as pdf file

Answer Text:
External diseconomies of scale;
-These are disadvantages experienced by firms within the industry arising from large scale operations hence increase in cost of production.
They include:
-Competition for available market as number of firms
producing similar products increase.
-Scramble for available labour and high salaries
-Inadequate raw materials-Shortage of raw materials arises as firms compete leading to increased cost.
-Difficulties of obtaining land for expansion
-Inadequate power and rationing-power may become inadequate leading to rationing.
-High rent and cost of financing the business.