When a firm experiences diseconomies of scale,
A)short-run average total cost is minimized.
B)long-run average total cost is minimized.
C)long-run average total cost increases as output increases.
D)long-run average total cost decreases as output increases.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur when the firm grows too large, leading to a decrease in efficiency and an increase in long-run average total cost as output increases. Therefore, the correct answer is C, long-run average total cost increases as output increases.

When a Firm Experiences Diseconomies of Scale