If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm's long-run average cost curve starts increasing as output increases. This may be due to factors such as increased managerial difficulties, less efficient use of resources, and inadequate communication within the organization. As a result, the firm faces higher costs per unit of output, making it less profitable in the long run.

If a Firm Is Experiencing Diseconomies of Scale, Its Long-Run