Question

why diseconomies of scale occur on the long-run average total cost curve falls?

Answer 1

It happens because there are investment in technologies, for that people are not well skilled to work with, investment in expansions, but output level does not increase with the increase in capacity. At the same time, hiring huge number of workers and managers unable to manage them, bring diseconomy of scale. It happens, when firms try to reduce the ATC of production in the long run, but it is not complemented by the competent work force and demand in the market that can be catered with increase in output. It converts economy of scale to become diseconomies of scale and it makes , the cost of output starts increasing.