Diseconomies to scale are illustrated by
A) a downward sloping long-run average cost curve.
B) a horizontal long-run average cost curve.
C) an upward sloping long-run average cost curve.
D) a long-run average cost curve that is shaped like an upside down U.

Question

Quizplus · Accepted Answer

Diseconomies to scale occur when a firm experiences an increase in long-run average costs as output increases. This is represented by an upward sloping long-run average cost curve. Option A is incorrect because a downward sloping long-run average cost curve represents economies of scale. Option B is incorrect as it represents constant returns to scale. Option D is incorrect as it describes a U-shaped long-run average cost curve, which is often associated with economies and diseconomies of scale balancing each other out.

Diseconomies to Scale Are Illustrated by