External diseconomies of scale occur when
A)industry expansion leads to a decrease in marginal product.
B)long-run marginal cost increases with output.
C)problems with managing a large firm cause long-run average total costs to rise with output.
D)industry expansion causes demand to increase.
E)industry expansion causes input prices to rise.

Question

Quizplus · Accepted Answer

External diseconomies of scale occur when industry expansion causes input prices to rise. This can be due to increased competition for resources, increased transportation costs, or other factors that lead to a rise in the cost of inputs. As a result, long-run average total costs increase with output, leading to diseconomies of scale.

External Diseconomies of Scale Occur When