Which of the following statements about diseconomies of scale is correct?
A)They pertain to the short run only.
B)They pertain to the long run only.
C)They pertain to both the short run and the long run.
D)They are synonymous with increasing returns to scale.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur in the long run when a firm's scale of production increases to the point where the costs per unit start to increase. This is because, in the long run, all factors of production are variable, allowing the firm to adjust all inputs, which can lead to inefficiencies and higher costs per unit as the firm becomes too large.

Which of the Following Statements About Diseconomies of Scale Is