Graph 13-6
This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s).
-Refer to Graph 13-6. At levels of output above point N, the firm experiences:

Question

Graph 13-6
  This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s).
-Refer to Graph 13-6. At levels of output above point N, the firm experiences:

Quizplus · Accepted Answer

At levels of output above point N, the average total cost starts increasing which indicates that the firm is experiencing diseconomies of scale. This means that the cost of production is increasing at a faster rate than the increase in output, leading to a decrease in profit margins. Therefore, the correct option is D - diseconomies of scale.

Graph 13-6 This Graph Depicts Average Total Cost Functions for Functions