Figure 7.4.2
-The cost-output elasticity equals 1.4. This implies that:
A) there are neither economies nor diseconomies of scale.
B) there are economies of scale.
C) there are diseconomies of scale.
D) marginal cost is less than average cost.

Question

Figure 7.4.2
-The cost-output elasticity equals 1.4. This implies that:
A) there are neither economies nor diseconomies of scale. 
B) there are economies of scale. 
C) there are diseconomies of scale. 
D) marginal cost is less than average cost.

Quizplus · Accepted Answer

A cost-output elasticity greater than 1 indicates diseconomies of scale, meaning costs increase more than proportionally with output.

Figure 7.4.2 -The Cost-Output Elasticity Equals 1.4. This Implies That