A Firm Is Operating at a Scale Where Diseconomies of Scale

question 112

Multiple Choice

A firm is operating at a scale where diseconomies of scale are present. Why is the firm NOT operating efficiently?

• A) The firm is operating at a scale where total fixed costs are not minimized.
• B) The firm is operating at a scale where the average total cost of production is falling as output expands.
• C) The firm has grown so large that average total cost increases as output expands.
• D) The firm is operating at a scale where average fixed costs are not as low as possible.

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Definitions:

High-Value

Refers to items or services that are of significant worth, often due to their quality, scarcity, or demand.

Low-Value

Describes items or services perceived as offering limited benefit or worth compared to their cost or other alternatives.

Expected Value

A calculated average of all possible values for a random variable, weighted by their respective probabilities.

Low-Value Bidders

Participants in an auction or tender process who submit bids that are significantly lower than those of other bidders.