When a firm is facing diseconomies of scale,total cost will
A) decrease as the firm increases its output.
B) increase at a decreasing rate as the firm increases its output.
C) decrease at an increasing rate as the firm increases its output.
D) increase at an increasing rate as the firm increases its output.
E) increase proportionately to output.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when the firm becomes too large and complex, making it difficult to manage and coordinate. This results in an increase in total cost at an increasing rate as the firm increases its output. Therefore, the correct answer is D.

When a Firm Is Facing Diseconomies of Scale,total Cost Will