Diseconomy of scale
Okay kiddo, imagine you have a lemonade stand. When you first start, it's just you and your friend and you guys can make lemonade pretty quickly. But as more and more people come to buy lemonade, you have to hire more and more friends to help make the lemonade.
Now, at first, this might be a good thing because you can make more lemonade and sell it to more people. But eventually, if you keep hiring more and more friends, you might run into some problems. For example, maybe there isn't enough room for everyone to work or maybe it's hard to keep track of who is doing what.
These problems can slow down the production process and might even make it more expensive to make the lemonade. This is what we call diseconomy of scale. Basically, as a company gets bigger and bigger, it can become less efficient and more expensive to produce goods and services.
So, just like how having too many friends working at your lemonade stand can create problems, having too many workers or resources for a company can create problems that make it harder to make money. Does that make sense, kiddo?
Now, at first, this might be a good thing because you can make more lemonade and sell it to more people. But eventually, if you keep hiring more and more friends, you might run into some problems. For example, maybe there isn't enough room for everyone to work or maybe it's hard to keep track of who is doing what.
These problems can slow down the production process and might even make it more expensive to make the lemonade. This is what we call diseconomy of scale. Basically, as a company gets bigger and bigger, it can become less efficient and more expensive to produce goods and services.
So, just like how having too many friends working at your lemonade stand can create problems, having too many workers or resources for a company can create problems that make it harder to make money. Does that make sense, kiddo?
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