The manager of HDG Computers reports that if output expands in the long run then average costs will rise.This is an example of

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The statement given by the manager of HDG Computers suggests that the firm is experiencing diseconomies of scale. This means that as the firm grows and increases output, its average costs are increasing, which is indicative of inefficiencies in production and management. Economies of scale, on the other hand, refer to the situation when average costs decrease as output expands. Minimum efficient scale (MES) refers to the minimum level of output at which a firm can produce at the lowest possible average cost. Constant returns to scale mean that a proportional increase in all inputs leads to a proportional increase in output without any change in the average cost of production.

The Manager of HDG Computers Reports That If Output Expands