Suppose that a firm's long-run average total costs of producing hand-crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing
A)economies of scale.
B)constant returns to scale.
C)specialization.
D)coordination problems.

Question

Quizplus · Accepted Answer

The increase in average total costs from $300 to $325 as output increases from 10,000 to 11,000 chairs suggests that the firm is experiencing diseconomies of scale, likely due to coordination problems as the firm grows larger.

Suppose That a Firm's Long-Run Average Total Costs of Producing