Asked by Rania Laamiri on Jul 27, 2024

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When diseconomies of scale occur:

A) long-run average cost rises.
B) marginal cost declines.
C) average total cost declines.
D) average variable cost declines.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm operates on a larger scale due to inefficiencies that arise.

Long-Run Average Cost

The per-unit cost of production in the long run, where all inputs are variable and economies of scale have been reached.

Marginal Cost

The cost incurred in producing one additional unit of a product or service.

  • Analyze the effect of scale on production costs in both the short run and long run.
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Isabel PinheiroJul 30, 2024
Final Answer :
A
Explanation :
Diseconomies of scale refer to the situation where the firm's long-run average cost increases as it increases its output. This could be due to various factors such as inefficiencies in coordination, management, or communication problems. As such, the costs of producing each additional unit of output increase, leading to a rising long-run average cost. Therefore, option A is the correct answer. The other options (B, C, and D) are incorrect as they refer to situations that occur during economies of scale, not diseconomies.