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

-A positively sloped long run average cost implies:
A)economies of scale.
B)constant returns to scale.
C)diseconomies of scale.
D)diminishing marginal returns to a factor.
E)increasing returns to scale.

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 positively sloped long run average cost implies:
A)economies of scale. 
B)constant returns to scale. 
C)diseconomies of scale. 
D)diminishing marginal returns to a factor. 
E)increasing returns to scale.

Quizplus · Accepted Answer

A positively sloped long run average cost curve implies that as the level of output increases, the firm experiences diseconomies of scale. This means that the firm is facing an increase in average cost as it expands production, indicating that the costs are rising faster than the output increases. This could occur due to a variety of factors, such as difficulty in coordinating operations on a larger scale, scarcity of resources, or limitations in accessing economies of scale.

The Table Given Below Shows the Average Total Cost of Production