When long-run average total cost increases as output increases,a firm experiences
A)diseconomies of scale
B)economies of scale
C)constant returns to scale
D)decreasing marginal cost
E)greater total cost in the long run than in the short run

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm's long-run average total cost (LRATC) increases as output increases due to factors such as increased coordination costs, communication costs, and difficulties with control and management. As the firm gets bigger, it becomes harder to manage the production process efficiently, leading to higher costs per unit. Therefore, option A is the correct answer.

When Long-Run Average Total Cost Increases as Output Increases,a Firm