When firms become so large that they have to add additional layers of management and decision making becomes more cumbersome,
A)economies of scale are said to occur
B)marginal cost begins to fall in the short run
C)marginal cost begins to rise in the short run
D)the long-run average total cost curve is flat
E)the long-run average total cost curve slopes upward

Question

Quizplus · Accepted Answer

As firms become larger and add additional layers of management, the costs of coordination and communication increase, resulting in inefficiencies. This leads to a higher long-run average total cost and a sloping upward long-run average total cost curve.

When Firms Become So Large That They Have to Add