Which of the following would illustrate diseconomies of scale?
A)The rising segment of the SRAC curve.
B)The rising segment of the LRAC curve
C)A growing margin between short-run and long-run average cost as output increased.
D)Marginal cost below short-run average cost.
E)Marginal cost above short-run average cost.

Question

Quizplus · Accepted Answer

The rising segment of the LRAC curve indicates that as the firm expands its production in the long run, the average cost per unit of output increases. This is due to inefficiencies that arise with the increase in size and complexity of the firm. This is an illustration of diseconomies of scale, which is the opposite of economies of scale where the average cost per unit of output decreases as the firm expands. The other options are not illustrative of diseconomies of scale.

Which of the Following Would Illustrate Diseconomies of Scale