If a firm enlarges its factory size and realizes higher average costs of production then
A) it has experienced economies of scale.
B) it has experienced diseconomies of scale.
C) it has experienced constant returns to scale.
D) the long-run average cost curve slopes downward.
E) the long-run average cost curve shifts upward.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm increases its production size and the average costs of production increase, indicating inefficiencies as the firm grows larger.

If a Firm Enlarges Its Factory Size and Realizes Higher