If technological innovation occurs when a firm is experiencing diseconomies of scale:
A) the long-run average total cost curve will shift down but will still rise as output expands.
B) long-run average total costs will remain the same as output expands.
C) short-run average total costs will fall as output expands.
D) product prices will rise, leading to inflation.

Question

Quizplus · Accepted Answer

Technological innovation typically reduces costs, shifting the long-run average total cost curve downward, but if diseconomies of scale persist, costs will still rise with increased output.

If Technological Innovation Occurs When a Firm Is Experiencing Diseconomies