Diseconomies of scale

Imagine you are building a tower with blocks. When you start, you can build it easily because you only have a few blocks to work with. But as you keep adding more and more blocks, the tower gets taller and taller - it becomes harder and harder to build.

Something similar can happen in a factory or a company that makes things. When a company is just starting out, it may be easy to make a few products at a time. But as the company grows bigger, it needs more resources to make more products, like workers or machines. And these resources become more and more expensive as the company gets bigger.

At a certain point, the company may find that it's becoming harder and harder to produce each additional product because the costs are increasing faster than the benefits. This is called diseconomies of scale.

Just like it's harder to build a taller tower of blocks, it's harder for a big company to keep growing without running into problems like higher labor costs or longer production times. If the company doesn't find a way to fix these problems, it may have to stop growing or even shrink in size.