Suppose that in 2012 MBI Corp. produced 100 million units of a good at an average cost of $6, and in 2013 MBI Corp. expanded its plant capacity and produced 200 million units at an average cost of $6.20. In this range, one can conclude that MBI Corp. is experiencing
A) economies of scale.
B) diseconomies of scale.
C) neither economies of scale or diseconomies of scale.
D) increasing marginal product.

Question

Quizplus · Accepted Answer

MBI Corp. is experiencing diseconomies of scale because as the quantity of goods produced doubled, the average cost per unit also increased, indicating that producing more units is becoming more expensive per unit.

Suppose That in 2012 MBI Corp