Suppose there is a technology to produce Grendels such that there are diseconomies of scale after the first unit is produced. There are both fixed (a physical plant called a lair) and variable (food that grows in lairs) costs of production. Which statement is true?

Question

Quizplus · Accepted Answer

Diseconomies of scale after the first unit imply that costs per unit increase with each additional unit produced in a single facility. Therefore, it's cheaper to produce each Grendel in its own lair to avoid these increased costs.

Suppose There Is a Technology to Produce Grendels Such That