If diseconomies of scale are present,
A)average total cost is decreasing.
B)the long-run average cost curve has a negative slope.
C)economies of scale are also present.
D)the long-run average cost curve has a positive slope.
E)the average total cost curve shifts downward.

Question

Quizplus · Accepted Answer

Diseconomies of scale refer to a situation where increasing the level of output results in a higher increase in costs than the increase in production. This leads to a rise in long-run average cost (LRAC) curve. Hence, the best choice is D, which states that the LRAC curve has a positive slope in the presence of diseconomies of scale. Options A, B, and E are incorrect because they suggest a decrease in average total cost, a negative slope of LRAC, and a downward shift of the average total cost curve, respectively, which are not consistent with the concept of diseconomies of scale. Option C is also incorrect because diseconomies of scale and economies of scale are opposite phenomena.

If Diseconomies of Scale Are Present