In the long run, decreasing returns to scale are likely to be caused by
A) decreasing costs.
B) diminishing returns to the variable factor.
C) management diseconomies.
D) increasing specialization.
E) a decrease in factor prices.

Question

Quizplus · Accepted Answer

In the long run, decreasing returns to scale are often due to management diseconomies, where the complexity and inefficiencies in managing a larger scale of operations lead to reduced productivity.

In the Long Run, Decreasing Returns to Scale Are Likely