When a Firm Experiences Diseconomies of Scale

question 533

Multiple Choice

When a firm experiences diseconomies of scale,

• A)short-run average total cost is minimized.
• B)long-run average total cost is minimized.
• C)long-run average total cost increases as output increases.
• D)long-run average total cost decreases as output increases.

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Definitions:

Risk-Averse

A description of an investor or decision-maker who prefers to avoid risks, favoring safer options over potentially higher but more uncertain returns.

Wealthy

Possessing a substantial amount of money, assets, or valuable resources, significantly above the societal average.

Private Information

Information that is not publicly available and is held privately by individuals or organizations, often leading to asymmetrical information in markets or negotiations.

Economic Inefficiency

A situation where resources are not allocated in the most beneficial manner, resulting in waste or a loss of potential gain.