- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 5. Understanding Economies and Diseconomies of Scale
CFA Practice Question
Which of the following is the best explanation for diseconomies of scale?
A. Coordination problems
B. Indivisibilities
C. Diminishing returns
Explanation: Diseconomies of scale occur when long-run average cost rises. A good explanation for this is coordination problems resulting from the difficulty of managing large organizations. Answer C (diminishing returns) is a short-run problem that comes from the fact that all inputs cannot be adjusted, and is thus unrelated to diseconomies of scale.
User Contributed Comments 3
| User | Comment |
|---|---|
| Drzewes | that's a nice one to lose points on !!! |
| azramirza | whats indivisibilities?? |
| LCMilkbone | @Drzewes lmaooooooooo |