Diseconomies of scale occur when
A)long-run average costs rise as a firm increases its output.
B)long-run average costs fall as a firm expands its plant size.
C)short-run average costs rise as a firm expands its plant size.
D)long-run labor costs rise as a firm increases its output.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when long-run average costs rise as a firm increases its output. This typically happens when a firm becomes too large or complex, making it difficult to manage and coordinate operations efficiently. Additionally, there may be communication breakdowns, bureaucracy, or other inefficiencies that emerge as a result of growth, which can lead to higher costs for the firm.

Diseconomies of Scale Occur When