An increase in output would result in a rise in long-run average costs when there are
A) economies of scale.
B) diseconomies to scale.
C) constant returns to scale.
D) the law of diminishing marginal product.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when an increase in output leads to a rise in per-unit costs due to factors such as decreased efficiency or increased managerial difficulties. This is the only option given that results in an increase in costs with an increase in output. Economies of scale, constant returns to scale, and the law of diminishing marginal product are all associated with a decrease in per-unit costs with increased output.

An Increase in Output Would Result in a Rise in Long-Run