In the long run, a firm might experience rising per-unit cost due to:

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm grows too large and becomes inefficient. This can result in higher per-unit costs as the firm experiences coordination problems, communication breakdowns, and other inefficiencies. This is the opposite of economies of scale, which result in lower per-unit costs as a firm grows larger. The law of supply and the law of diminishing marginal returns can both affect costs in the short run, but they are not necessarily related to rising per-unit costs in the long run.

In the Long Run, a Firm Might Experience Rising Per-Unit