At a particular output level, if a firm's long- run marginal cost is $12 and its long- run average cost is $8, the firm is likely to be experiencing _________.

Question

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A firm is experiencing diseconomies of scale if its long-run marginal cost is greater than its long-run average cost. In this case, the long-run marginal cost ($12) is higher than the long-run average cost ($8), indicating that the firm is likely experiencing diseconomies of scale.

At a Particular Output Level, If a Firm's Long- Run