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JAMB Economics 2010 Question 22

Question 22

Theory of Costs and Revenue

The rising portion of the long-run average cost curve of a firm is an indication that it is experiencing

  1. A.increasing efficiency
  2. B.economies of scale
  3. C.diseconomies of scale
  4. D.increasing marginal returns.
Show the answer and explanation

Answer: C (diseconomies of scale)

Explanation

Long-run average cost rises when the firm grows too large and suffers diseconomies of scale.