A firm's long-run average cost curve is increasing as output increases over all levels of output. As a result
A) small firms and large firms will have identical average costs.
B) there should be only one firm in the industry.
C) small firms would have higher average costs of production than large firms.
D) there should be more than one firm in the industry.

Question

Quizplus · Accepted Answer

When the long-run average cost curve is increasing, it indicates diseconomies of scale, meaning that as firms grow larger, their average costs increase. This suggests that having multiple smaller firms could be more cost-effective than having one large firm.

A Firm's Long-Run Average Cost Curve Is Increasing as Output