Diseconomies of scale occur when

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm experiences rising long-run average costs with an increase in output, which can result from factors such as decreasing efficiency, coordination problems, or communication difficulties as the organization grows larger. Therefore, option A is the correct answer. Option B describes economies of scale, which imply falling long-run average costs as a firm expands its plant, while option C refers to short-run rather than long-run costs. Option D pertains to labor costs only and does not represent a comprehensive understanding of the concept of diseconomies of scale.

Diseconomies of Scale Occur When