If a firm is producing at its minimum efficient scale, increasing its output slightly will lead to diseconomies of scale.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm's average cost of production increases as its output increases. If a firm is producing at its minimum efficient scale, it is already operating at the point where its average cost of production is minimized. Increasing its output slightly will therefore lead to diseconomies of scale, as its average cost of production will increase.

If a Firm Is Producing at Its Minimum Efficient Scale