{"id":227057,"date":"2025-09-05T17:51:26","date_gmt":"2025-09-05T12:21:26","guid":{"rendered":"https:\/\/www.oliveboard.in\/blog\/?p=227057"},"modified":"2025-09-05T17:51:27","modified_gmt":"2025-09-05T12:21:27","slug":"economies-and-diseconomies-of-scale","status":"publish","type":"post","link":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/","title":{"rendered":"Concepts of Economies of Scale &#038; Diseconomies of Scale"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_77 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of content<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#Understanding_Economies_of_Scale\" >Understanding Economies of Scale<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#Understanding_Diseconomies_of_Scale\" >Understanding Diseconomies of Scale<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#Numerical_Example_on_Economies_Diseconomies_of_Scale\" >Numerical Example on Economies &amp; Diseconomies of Scale<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#Long-Run_Average_Cost_LAC_Curve\" >Long-Run Average Cost (LAC) Curve<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#Minimum_Efficient_Scale_MES\" >Minimum Efficient Scale (MES)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#Real_World_Examples_for_Candidates\" >Real World Examples for Candidates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#How_to_Write_a_10_Mark_Answer\" >How to Write a 10 Mark Answer?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#Comparison_Table_of_Economies_vs_Diseconomies_of_Scale\" >Comparison Table of Economies vs Diseconomies of Scale<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>In economics, firms aim to lower costs and increase efficiency as they expand. Economies of scale explain why larger firms often enjoy lower average costs, while diseconomies of scale show why costs may rise after a certain point. For exam aspirants preparing for RBI Grade B, SEBI Grade A, NABARD, UPSC Economics, and EPFO, understanding these concepts is crucial. This blog covers the definitions, types, numerical examples, diagrams, and exam-oriented insights.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_Economies_of_Scale\"><\/span>Understanding Economies of Scale<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Economies of scale occur when the average cost of production falls as output increases. This happens because fixed costs spread over more units and firms use resources more efficiently.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1536\" height=\"1024\" src=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/ChatGPT-Image-Sep-5-2025-05_47_08-PM.png\" alt=\"\" class=\"wp-image-227072\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Types of Economies of Scale:<\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Internal Economies of Scale (within a firm):<\/strong><ul><li><em>Technical economies<\/em> \u2013 use of better machinery reduces per-unit cost.<\/li><li><em>Managerial economies<\/em> \u2013 specialization of managers improves efficiency.<\/li><li><em>Financial economies<\/em> \u2013 larger firms borrow at lower interest rates.<\/li><li><em>Marketing economies<\/em> \u2013 bulk advertising reduces average cost per unit.<\/li><li><em>Risk-bearing economies<\/em> \u2013 diversification reduces risk.<\/li><\/ul><\/li><li><strong>External Economies of Scale (within an industry):<\/strong><ul><li><em>Skilled labor availability<\/em> \u2013 industries attract trained workers.<\/li><li><em>Shared infrastructure<\/em> \u2013 ports, transport, suppliers.<\/li><li><em>Research clusters<\/em> \u2013 knowledge spillover lowers cost for all firms<\/li><\/ul><\/li><\/ul>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.oliveboard.in\/rbi-grade-b-mock-test\/?ref=contpp-aib\" target=\"_blank\" rel=\"noreferrer noopener\">Attempt RBI Grade B Mock Test 2025<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_Diseconomies_of_Scale\"><\/span>Understanding Diseconomies of Scale<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When a firm grows too large, it may face inefficiencies and rising costs. This is called diseconomies of scale.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1536\" height=\"1024\" src=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/ChatGPT-Image-Sep-5-2025-05_51_11-PM.png\" alt=\"\" class=\"wp-image-227074\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Types of Diseconomies of Scale:<\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Internal Diseconomies:<\/strong><ul><li><em>Coordination problems<\/em> \u2013 too many workers\/managers slow decision-making.<\/li><li><em>Bureaucracy<\/em> \u2013 rigid rules increase costs.<\/li><li><em>Worker alienation<\/em> \u2013 employees feel less motivated in large firms.<\/li><\/ul><\/li><li><strong>External Diseconomies:<\/strong><ul><li><em>Rising input costs<\/em> \u2013 demand for resources raises prices.<\/li><li><em>Congestion<\/em> \u2013 industries cluster, leading to traffic, delays, and higher costs<\/li><\/ul><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Numerical_Example_on_Economies_Diseconomies_of_Scale\"><\/span>Numerical Example on Economies &amp; Diseconomies of Scale<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A clear numerical example makes it easier to understand how costs behave as output expands. By working through a step-by-step calculation, candidates can see exactly when economies kick in and when diseconomies start affecting the firm.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Output (Units)<\/strong><\/td><td><strong>Total Cost (\u20b9)<\/strong><\/td><td><strong>Average Cost (\u20b9\/unit)<\/strong><\/td><\/tr><tr><td>10<\/td><td>1000<\/td><td>100<\/td><\/tr><tr><td>20<\/td><td>1600<\/td><td>80<\/td><\/tr><tr><td>40<\/td><td>2800<\/td><td>70<\/td><\/tr><tr><td>60<\/td><td>4800<\/td><td>80<\/td><\/tr><tr><td>80<\/td><td>7200<\/td><td>90<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Here, average cost falls from 100 to 70 (economies of scale), but rises again after 40 units (diseconomies of scale).<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.oliveboard.in\/rbi-grade-b\/?ref=contpp-aib\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Explore RBI Grade B Online Courses<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Long-Run_Average_Cost_LAC_Curve\"><\/span>Long-Run Average Cost (LAC) Curve<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Long-Run Average Cost (LAC) curve shows how the per-unit cost of production changes when all inputs are variable, and firms can fully adjust their scale of operation. Unlike the short run, where at least one factor is fixed, the long run allows firms to expand or contract plant size, labor, and capital to achieve the most efficient level of output.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1536\" height=\"1024\" src=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/ChatGPT-Image-Sep-5-2025-04_40_07-PM.png\" alt=\"\" class=\"wp-image-227065\"\/><\/figure>\n\n\n\n<p>The LAC curve is typically U-shaped:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Downward-sloping phase (Economies of Scale):<\/strong> As output increases, average costs fall because resources are used more efficiently, specialization improves, and fixed costs spread over larger output.<\/li><li><strong>Flat phase (Minimum Efficient Scale, MES):<\/strong> This is the point where costs are at their lowest, and the firm is producing at optimal scale.<\/li><li><strong>Upward-sloping phase (Diseconomies of Scale):<\/strong> Beyond a certain point, coordination problems, higher administrative costs, and inefficiencies set in, pushing average costs upward.<\/li><\/ul>\n\n\n\n<p>The LAC curve is not just theoretical it\u2019s important for business decisions, pricing strategies, and exam answers. It helps explain why some industries (like airlines or steel) are dominated by a few large firms that achieve scale economies, while others (like restaurants) remain competitive with smaller firms.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Minimum_Efficient_Scale_MES\"><\/span>Minimum Efficient Scale (MES)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Minimum Efficient Scale (MES) is the smallest level of output at which a firm can produce at the lowest possible average cost in the long run. In other words, MES is the output level where the firm fully exploits economies of scale and achieves maximum efficiency.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Before MES:<\/strong> Average costs decline as output rises, due to spreading of fixed costs, specialization, and bulk purchasing.<\/li><li><strong>At MES:<\/strong> Average costs reach their lowest point, and the firm achieves the most efficient production scale.<\/li><li><strong>Beyond MES:<\/strong> Producing more does not reduce costs further and may eventually lead to diseconomies of scale.<\/li><\/ul>\n\n\n\n<p>The MES is significant because it determines:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The <strong>market structure<\/strong> of an industry (e.g., if MES is very high, only a few large firms can survive).<\/li><li>The <strong>entry barriers<\/strong> for new firms (a high MES makes it difficult for small firms to compete).<\/li><li>The <strong>cost competitiveness<\/strong> of firms in both domestic and global markets.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.oliveboard.in\/rbi-grade-b-2025-free-prep-kit\/?ref=contpp-aib\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Download RBI Grade B 2025 Free Preparation Kit<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Real_World_Examples_for_Candidates\"><\/span>Real World Examples for Candidates<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Understanding theory is easier when connected to real markets. From manufacturing giants to service industries, real-world cases of economies and diseconomies of scale help candidates relate concepts to current business practices and exam-oriented case studies.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Airlines:<\/strong> Larger fleets reduce per-seat cost (economies), but congestion in busy airports raises costs (diseconomies).<\/li><li><strong>IT Companies:<\/strong> Shared R&amp;D clusters reduce costs (economies), but large teams cause coordination problems (diseconomies).<\/li><li><strong>Automobiles:<\/strong> Robots reduce per-car cost, but too much scale may cause supply chain issues.<\/li><\/ul>\n\n\n\n<p><strong>Exam Tip:<\/strong> Use \u201cAirlines \u2013 Economies &amp; Congestion Diseconomies\u201d as a ready-made example.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Write_a_10_Mark_Answer\"><\/span>How to Write a 10 Mark Answer?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To write a strong answer in exams like RBI\/SEBI\/NABARD:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Start with a definition (economies &amp; diseconomies).<\/li><li>Add a diagram (LAC curve).<\/li><li>Explain types (internal &amp; external).<\/li><li>Give a numerical example (short table).<\/li><li>Conclude with real-world case + mention MES.<\/li><\/ol>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.oliveboard.in\/rbi-grade-b-pyqs\/?ref=contpp-aib\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Download RBI Grade B PYQs of 7 years\u00a0<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Comparison_Table_of_Economies_vs_Diseconomies_of_Scale\"><\/span>Comparison Table of Economies vs Diseconomies of Scale<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A side-by-side table offers a quick revision tool. By comparing key differences between economies and diseconomies of scale, candidates can prepare faster for exams and answer short or long questions with clarity.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Aspect<\/strong><\/td><td><strong>Economies of Scale<\/strong><\/td><td><strong>Diseconomies of Scale<\/strong><\/td><\/tr><tr><td>Average Cost<\/td><td>Falls with output<\/td><td>Rises with output<\/td><\/tr><tr><td>Causes<\/td><td>Specialization, bulk buying, efficiency<\/td><td>Coordination failure, bureaucracy<\/td><\/tr><tr><td>Example Industry<\/td><td>Automobiles, Airlines (per-unit cost drop)<\/td><td>Telecom congestion, Bureaucratic firms<\/td><\/tr><tr><td>Exam Diagram<\/td><td>Falling part of U-shaped LAC curve<\/td><td>Rising part of U-shaped LAC curve<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1757074150441\"><strong class=\"schema-faq-question\">Q1. What are economies of scale?<\/strong> <p class=\"schema-faq-answer\">Economies of scale occur when a firm\u2019s average cost per unit falls as output increases.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1757074337933\"><strong class=\"schema-faq-question\">Q2. What are diseconomies of scale?<\/strong> <p class=\"schema-faq-answer\">Diseconomies of scale happen when average costs rise as the firm becomes too large.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1757074348917\"><strong class=\"schema-faq-question\">Q3. What is the Long-Run Average Cost (LAC) curve?<\/strong> <p class=\"schema-faq-answer\">The LAC curve shows the relationship between output and average cost when all inputs are variable. It is typically U-shaped.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1757074359397\"><strong class=\"schema-faq-question\">Q4. What is Minimum Efficient Scale (MES)?<\/strong> <p class=\"schema-faq-answer\">MES is the smallest output level at which a firm achieves the lowest possible average cost.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1757074370190\"><strong class=\"schema-faq-question\">Q5. Can a firm experience both economies and diseconomies?<\/strong> <p class=\"schema-faq-answer\">Yes. 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Economies of scale explain why larger firms<\/p>\n","protected":false},"author":52,"featured_media":227070,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10247],"tags":[17946,17945],"class_list":["post-227057","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-rbi-sebi-nabard","tag-diseconomies-of-scale","tag-economies-of-scale","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-50"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Concepts of Economies of Scale &amp; Diseconomies of Scale<\/title>\n<meta name=\"description\" content=\"Understand Economies and Diseconomies of Scale with definitions, diagrams, numerical examples, industry cases, and exam-oriented notes\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Concepts of Economies of Scale &amp; Diseconomies of Scale\" \/>\n<meta property=\"og:description\" content=\"In economics, firms aim to lower costs and increase efficiency as they expand. 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What are economies of scale?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Economies of scale occur when a firm\u2019s average cost per unit falls as output increases.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074337933","position":2,"url":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074337933","name":"Q2. What are diseconomies of scale?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Diseconomies of scale happen when average costs rise as the firm becomes too large.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074348917","position":3,"url":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074348917","name":"Q3. What is the Long-Run Average Cost (LAC) curve?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The LAC curve shows the relationship between output and average cost when all inputs are variable. It is typically U-shaped.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074359397","position":4,"url":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074359397","name":"Q4. What is Minimum Efficient Scale (MES)?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"MES is the smallest output level at which a firm achieves the lowest possible average cost.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074370190","position":5,"url":"https:\/\/www.oliveboard.in\/blog\/economies-and-diseconomies-of-scale\/#faq-question-1757074370190","name":"Q5. Can a firm experience both economies and diseconomies?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes. 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