Question 7
Theory of Costs and RevenueIf the cost of production for a firm continues to increase as its output rises, the firm is said to be experiencing
- A.large-scale production
- B.profit maximization
- C.economies of scale
- D.diseconomies of scale.
Show the answer and explanation
Answer: D (diseconomies of scale.)
Explanation
When a firm's (average) cost keeps rising as it grows larger, it is facing diseconomies of scale.