Which of the Following Results from Bureaucratic Red Tape, Breakdown

question 11

Multiple Choice

Which of the following results from bureaucratic red tape, breakdown of top-to-bottom communication, and poor decisions being made when the firm gets too large and long-run average costs increase?

• A) Decreasing returns to scale
• B) Diseconomies of scale
• C) Increasing returns to scale
• D) Constant returns to scale

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Definitions:

Average Total Costs

A rephrasing: The sum of all production costs divided by the quantity of goods produced, indicating the average cost for each unit.

Average Variable Costs

This represents the total variable costs (costs that vary with the production level) divided by the quantity of output produced.

Total Costs

The sum of all costs incurred by a business in producing a particular quantity of a good or service, including both fixed and variable costs.

Economic Cost

The total cost of choosing one action over another, including both explicit costs and opportunity costs.