Diseconomies of scale occur
A) only in the short run.
B) only in the long run.
C) because of fixed costs.
D) none of the above.

Question

Quizplus · Accepted Answer

Diseconomies of scale occur only in the long run because in the short run, fixed costs cannot be adjusted, and therefore, average costs may still decrease even as output increases. However, in the long run, all costs become variable, and as output increases, inefficiencies, such as bureaucracy and communication difficulties, may arise, leading to an increase in average costs.

Diseconomies of Scale Occur