A Level Economics AQA Practice Exam

Which of the following is NOT typically considered a diseconomy of scale?

1. Coordination issues

2. Increased communication costs

3. Higher motivation among employees

4. Complex management structures

The correct answer is: Higher motivation among employees

The assertion that higher motivation among employees is not typically considered a diseconomy of scale is correct. Diseconomies of scale refer to the disadvantages or inefficiencies that occur when a company increases its production beyond a certain point. These can lead to rising per-unit costs, often due to factors such as coordination issues, increased communication costs, or complex management structures. Higher motivation among employees, on the other hand, is generally seen as a positive factor that can contribute to a company’s productivity and effectiveness. In larger organizations, if managed well, employee motivation can even improve due to better career development opportunities, more advanced training programs, and a wider range of roles. Therefore, it is incorrect to classify higher employee motivation as a diseconomy of scale, as it does not contribute to increased inefficiencies or higher costs associated with large-scale operations. In contrast, coordination issues can arise when different departments or teams within a large organization struggle to align their efforts, which can slow decision-making and reduce overall productivity. Increased communication costs occur as communication needs grow within a larger workforce, potentially leading to misunderstandings and inefficiencies. Lastly, complex management structures can create bureaucratic hurdles that complicate operations and reduce agility and responsiveness. These factors highlight why the other choices