The long-run average cost curve will be upward-sloping when the firm has:
A)economies of scale.
B)diseconomies of scale.
C)constant returns to scale.
D)diminishing returns.

Question

Quizplus · Accepted Answer

When a firm experiences diseconomies of scale, it means that as it increases its production, its long-run average costs begin to increase as well. This could happen due to a variety of reasons such as increased complexity in managing larger production levels or difficulty in coordinating and communicating within the organization. As a result, the long-run average cost curve becomes upward sloping. The other options given are not correct as they would result in a downward sloping or flat long-run average cost curve.

The Long-Run Average Cost Curve Will Be Upward-Sloping When the Firm