What are the sources of diseconomiesof scale? how does each eventually cause average unit cost to rise as?

Question

output increases?

Answer 1

When a firm grows, it may experience Economies of scale or Diseconomies of scale (which can be shown through the elongated cup schape of the LRAC curve, with many small, U shaped SRAC curves along it).

Economies of scale can only happen in the Long Run, when all factors of production are variable. The firm, a combination of all four factors of production, is assumed to seek profit maximisation.

Economies of scale (the near end of the LRAC curve) occur when the costs of producing fall in proportion to the firm's growth. There are 5 different economies of scale, which include technical, transport, marketing or managerial economies of scale.  A firm enjoying economies of scale will be able to produce at lower costs and which translate into greater revenue.

Diseconomies of scale (the far end of the LRAC curve) occur when the cost of production rises in proportion to the growth of the firm. They can result from bad infrastructure, difficulties in communication or (I don't really like this one) loss of identity.

Economies of scale can be very beneficial to a firm, but arguably also are a cause for unfair competition as opposed to other, smaller firms which do not enjoy economies of scale.

running out of time but hope it helped