When long-run average cost increases as output increases there are
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) none of the above.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when long-run average cost increases as output increases. This is because the firm is unable to spread its fixed costs over a larger output, resulting in higher average costs.

When Long-Run Average Cost Increases as Output Increases There Are