Diseconomies of scale occur when a firm's
A)marginal costs are constant as output increases.
B)long-run average total costs are decreasing as output increases.
C)long-run average total costs are increasing as output increases.
D)marginal costs are equal to average total costs for all levels of output.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm's long-run average total costs are increasing as output increases. This is often due to increased complexity, bureaucracy, and inefficiencies that arise as a firm grows larger. As a result, the firm may see diminishing returns to scale and higher costs per unit of output.

Diseconomies of Scale Occur When a Firm's