When long-run average costs rise as output increases, the firm is experiencing
A) diseconomies of scale.
B) diminishing returns.
C) constant returns to scale.
D) economies of scale.

Question

Quizplus · Accepted Answer

When long-run average costs rise as output increases, the firm is experiencing diseconomies of scale. This means that as the scale of production increases, the cost per unit of production also increases, making it less efficient and profitable for the firm.

When Long-Run Average Costs Rise as Output Increases, the Firm