Suppose the output elasticity of total cost is 1.5. This implies the average cost curve exhibits:
A)increasing returns to scale.
B)economies of scale.
C)neither economies nor diseconomies of scale.
D)diseconomies of scale.

Question

Quizplus · Accepted Answer

Output elasticity of total cost greater than 1 implies that costs increase at a faster rate than output, indicating diseconomies of scale.

Suppose the Output Elasticity of Total Cost Is 1