Diseconomies of scale at the firm level occur
A) wherever the firm's long-run average cost curve is horizontal
B) wherever the firm's long-run total cost curve is horizontal
C) where marginal cost equals marginal revenue
D) if a firm becomes "too large"
E) if any of the firm's plants becomes "too large"

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm becomes "too large" and experiences difficulties in coordinating and managing its operations. As the firm grows, there may be an increase in transaction costs, communication costs, and other administrative costs that can result in higher long-run average costs. Therefore, option D is the correct answer.

Diseconomies of Scale at the Firm Level Occur