If General Electric finds that when it doubles both its plant size and the amount of associated inputs, its output level does not double, then
A) the law of diminishing returns is in effect.
B) long-run average costs must be decreasing.
C) the firm is experiencing diseconomies of scale.
D) the firm should increase production.
E) the firm is experiencing constant returns to scale.

Question

Quizplus · Accepted Answer

The firm is experiencing diseconomies of scale because doubling inputs and plant size results in less than double output, indicating inefficiencies as scale increases.

If General Electric Finds That When It Doubles Both Its