When diseconomies of scale occur:
A)long-run average cost rises.
B)marginal cost declines.
C)average total cost declines.
D)average variable cost declines.

Question

Quizplus · Accepted Answer

Diseconomies of scale refer to the situation where the firm's long-run average cost increases as it increases its output. This could be due to various factors such as inefficiencies in coordination, management, or communication problems. As such, the costs of producing each additional unit of output increase, leading to a rising long-run average cost. Therefore, option A is the correct answer. The other options (B, C, and D) are incorrect as they refer to situations that occur during economies of scale, not diseconomies.

When Diseconomies of Scale Occur