When there are diseconomies of scale in production:
A) long-run average total cost declines as output expands.
B) long-run average total cost increases as output expands.
C) marginal cost decreases as output expands.
D) none of the above

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when the cost per unit increases as output expands. This is often due to the difficulties in coordinating and managing a large production process, causing inefficiencies and higher costs. Therefore, long-run average total cost increases as output expands.

When There Are Diseconomies of Scale in Production