When do diseconomies of scale occur?
A)When long-run average costs rise as a firm increases its output.
B)When long-run average costs fall as a firm expands its plant size.
C)When short-run average costs rise as a firm expands its plant size.
D)When long-run labour costs rise as a firm increases its output.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm experiences a rise in long-run average costs as it increases its output. This can happen due to various reasons such as the difficulty in managing a large workforce or increased complexity in coordinating production processes.

When Do Diseconomies of Scale Occur