Diseconomies of Scale
This it what happens when a firm becomes too large.
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Diseconomies of scale causes problems of:
- Low morale of workers.
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Although there are benefits to being big, not all firms are. This is because:
- The total market might be small.
- The market may just be local.
- Some services require personal attention (eg hairdressing), and if you're too big you lose the personal touch.
- The market may be specialist.
- The owner wants to keep control.
- Lack of money to expand.
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