When a firm's input prices do not vary much with the amount of output it produces,it experiences ______ of scale if its technology has ______ returns to scale.
A) Diseconomies; increasing
B) Economies; decreasing
C) Diseconomies; constant
D) Diseconomies; decreasing

Question

Quizplus · Accepted Answer

When a firm's input prices are relatively stable, but its technology has decreasing returns to scale, it means that as the firm increases its output, the additional output it gets for each additional unit of input decreases. This scenario leads to diseconomies of scale, where increasing the scale of production increases the average cost per unit.

When a Firm's Input Prices Do Not Vary Much with the Amount