What is not true if a firm exhibits decreasing average cost as quantity increases?
A)Marginal cost must be below average cost.
B)Firms would go bankrupt if all prices were equal to marginal cost.
C)More customers can be served at lower average costs per unit.
D)This is called diseconomies of scale.

Question

Quizplus · Accepted Answer

Decreasing average cost as quantity increases is indicative of economies of scale, not diseconomies of scale. Diseconomies of scale occur when average costs increase as output increases.

What Is Not True If a Firm Exhibits Decreasing Average