Increasing Scale Generally Raises the Unit Cost of Inputs

question 86

True/False

Increasing scale generally raises the unit cost of inputs.

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Definitions:

Diseconomies of Scale

The phenomenon when a firm experiences increased costs per unit of output due to inefficiencies associated with scale of production, contrary to economies of scale.

Long-run ATC

Referring to the average total cost of production when all inputs, including capital, are variable over a longer period.

Average Fixed Costs

When the production expenses that stay uniform, regardless of production levels, are divided by the number of goods produced.

Average Total Cost

The total cost of production divided by the total quantity of goods or services produced, representing the average cost per unit of output.