In the long run, firms reduce capital input under which of the following conditions?
A)Economies of scale
B)Diseconomies of scale
C)Constant returns to scale
D)When average total cost increases with output
E)When price equals marginal cost

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when a firm experiences an increase in average total costs as output increases, often due to difficulties in coordinating and managing a larger workforce and production process. One way for firms to combat the rising costs is to reduce the capital input, thus reducing the scale of their operations.

In the Long Run, Firms Reduce Capital Input Under Which