If an industry is characterized by substantial diseconomies of scale,as a particular firm in the industry expands its production capacity we will observe:
A)a decrease in marginal costs.
B)an increase in the marginal product of labor.
C)a decrease in the total fixed costs of production.
D)an increase in the average total costs of production.

Question

Quizplus · Accepted Answer

Substantial diseconomies of scale mean that as the production capacity of a firm expands, the average total costs of production increase. Therefore, an increase in production capacity for a particular firm in the industry will lead to an increase in average total costs of production.

If an Industry Is Characterized by Substantial Diseconomies of Scale,as