If general electric finds that doubling both its plant size and the amount of associated inputs does not double its output level, then the firm is experiencing diseconomies of scale.
Diseconomies of scale happen when a company or business grows so large that the costs per unit increase. It takes place when economies of scale no longer function for a firm. With this principle, rather than experiencing continued decreasing costs and increasing output, a firm sees an increase in costs when output is increased.
Internal diseconomies of scale involve either technical constraints on the production process that the firm uses or organizational issues that increase costs or waste resources without any change to the physical production process.
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