Exhibit 7-11 Movement from point b to point c in Exhibit 7-11 indicates that the firm is experiencing
A)economies of scale
B)increasing average cost
C)economies of cost
D)a decrease in average plant size
E)diseconomies of scale

Question

Exhibit 7-11  Movement from point b to point c in Exhibit 7-11 indicates that the firm is experiencing
A)economies of scale 
B)increasing average cost 
C)economies of cost 
D)a decrease in average plant size 
E)diseconomies of scale

Quizplus · Accepted Answer

The movement from point b to point c in Exhibit 7-11 indicates that the firm is experiencing diseconomies of scale. This is because the average cost per unit is increasing as output increases, indicating that the firm is facing higher costs and inefficiencies as it tries to produce more.

Exhibit 7-11 Movement from Point B to Point C