Suppose that in 2010 MBI Corp. produced 100 million units of a good at an average cost of $6, and in 2011 MBI Corp. expanded its plant capacity and produced 200 million units at an average cost of $6.20. In this range, one can conclude that MBI Corp. is experiencing:
A)economies of scale.
B)diseconomies of scale.
C)neither economies of scale or diseconomies of scale.
D)increasing marginal product.

Question

Quizplus · Accepted Answer

MBI Corp. is experiencing diseconomies of scale because the average cost per unit increased from $6 to $6.20 when production was increased from 100 million to 200 million units.

Suppose That in 2010 MBI Corp