Asked by Rachael Oreilly on May 09, 2024
Verified
When the long-run average total cost curve is downward-sloping as output increases,the firm has diseconomies of scale.
Diseconomies of Scale
An economic concept referring to a situation where, as a firm expands, the costs per unit increase.
Long-Run Average Total Cost Curve
A graphical representation that shows the lowest average total cost at which a firm can produce any given level of output in the long run, where all inputs are variable.
Downward-Sloping
A term often used in economics to describe a curve or line that represents a decrease in one variable as another increases, typical in demand curves.
- Acquire knowledge on the significance of scale economies in shaping the behavior of costs in the long run.
Verified Answer
SJ
SOPHEIAH JONES-FITZGERALDMay 15, 2024
Final Answer :
False
Explanation :
When the long-run average total cost curve is downward-sloping as output increases, it indicates economies of scale. Diseconomies of scale occur when the long-run average total cost curve is upward-sloping as output increases.
Learning Objectives
- Acquire knowledge on the significance of scale economies in shaping the behavior of costs in the long run.