Asked by Christian Rivera on May 02, 2024
Verified
When the long-run average total cost curve is upward sloping as output increases,the firm has diseconomies of scale.
Diseconomies Of Scale
Occur when a company grows so large that the costs per unit increase. It is the opposite of economies of scale.
Long-Run Average Total Cost Curve
A graphical representation showing the lowest possible cost at which any given level of output can be produced in the long run.
- Acquire knowledge about the effects of economies of scale, constant returns to scale, and diseconomies of scale.
Verified Answer
JR
Jillian RichardsMay 07, 2024
Final Answer :
True
Explanation :
When the long-run average total cost curve is upward sloping, it means that as output increases, the firm is experiencing higher average total costs. This indicates that the firm is facing diseconomies of scale, which occur when an increase in output leads to higher per-unit costs.
Learning Objectives
- Acquire knowledge about the effects of economies of scale, constant returns to scale, and diseconomies of scale.
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