Diseconomies of scale are illustrated by:

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when the firm becomes too large and encounters increased costs per unit of production. This is reflected by an upward-sloping long-run average cost curve. Option A is incorrect because a downward-sloping long-run average cost curve illustrates economies of scale. Option B is incorrect because a flat long-run average cost curve indicates constant returns to scale, where the cost per unit of production remains constant as the firm expands. Option D is incorrect because an upward-sloping short-run average total cost curve indicates diminishing marginal returns, which is a short-run concept and not directly related to the long-run impact of size on costs.

Diseconomies of Scale Are Illustrated By