The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5

-A firm gets less efficient as it gets bigger, if it is experiencing:
A)economies of scale.
B)constant returns to scale.
C)increasing returns to factors.
D)diseconomies of scale.
E)a period of post war recovery.

Question

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5
 
-A firm gets less efficient as it gets bigger, if it is experiencing:
A)economies of scale. 
B)constant returns to scale. 
C)increasing returns to factors. 
D)diseconomies of scale. 
E)a period of post war recovery.

Quizplus · Accepted Answer

When a firm experiences an increase in production costs as a result of becoming larger and less efficient, it is experiencing diseconomies of scale. This is the opposite of economies of scale, where a firm experiences a decrease in production costs as it becomes bigger due to increased efficiency. Constant returns to scale occur when a firm's production costs remain the same as it increases its output. Increasing returns to factors occur when a small increase in inputs results in a greater increase in output. Post-war recovery is unrelated to the concept of economies of scale.

The Table Given Below Shows the Average Total Cost of Production