Which of the following is most likely an example of diseconomies of scale?
A) The per-unit costs on Excel Publishing Company's manuals fell after it received a large order from the government.
B) Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs.
C) Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant.
D) The XYZ Co. increased production capacity by 25 percent and experienced a 30 percent increase in its total cost.

Question

Quizplus · Accepted Answer

When XYZ Co. increased production capacity by 25 percent and experienced a 30 percent increase in total cost, it indicates that the cost per unit increased, which is a sign of diseconomies of scale.

Which of the Following Is Most Likely an Example of Diseconomies