If General Electric finds that doubling both its plant size and the amount of associated inputs does not double its output level,then _____
A)the law of diminishing returns is in effect.
B)long-run average costs must be decreasing.
C)the firm is experiencing diseconomies of scale.
D)the firm should increase production.
E)the firm is experiencing constant returns to scale.

Question

Quizplus · Accepted Answer

When doubling both plant size and the amount of associated inputs does not double output, it indicates diseconomies of scale, meaning that the firm's per-unit production costs increase as its output increases.

If General Electric Finds That Doubling Both Its Plant Size