What is the difference between "diminishing marginal returns" and "diseconomies of scale"?
A)Both concepts explain why marginal cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor, while diseconomies of scale applies in the long run when all factors are variable.
B)Both concepts explain why average total cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor, while diseconomies of scale applies in the long run when all factors are variable.
C)Diminishing marginal returns, which applies only in the short run when at least one factor is fixed, explains why marginal cost increases, while diseconomies of scale, which applies in the long run when all factors are variable, explains why average cost increases.
D)Diminishing marginal returns, which applies only in the long run when all factors are variable, explains why average variable cost increases, while diseconomies of scale, which applies in the short run when at least one factor is fixed, explains why average total cost increases.

Question

Quizplus · Accepted Answer

Diminishing marginal returns and diseconomies of scale both contribute to an increase in costs, but they operate differently. Diminishing marginal returns occurs in the short term when at least one factor is fixed, and affects the marginal cost of production. Diseconomies of scale occur in the long term when all factors are variable, and affect the average cost of production.

What Is the Difference Between "Diminishing Marginal Returns" and "Diseconomies