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Please can you explain the law of diminishing returns and diseconomies of scale, and what is the difference between them? Thankyou
Diseconomies of scale = more cost/unit as volume increases eg caused by overtime payments.
Law of diminishing returns = at teh start you can get large improvements from modest expenditure. Later to get the small improvements left you have to spend lots.
Eg, relatively easy to get aircraft to arrive within 1/2 hour of schedule; very difficult to get them to arrive within 1/2 minute of schedule.
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