The positively-sloped part of the long-run average total cost curve is due to which of the following?

a) Diseconomies of scale

b) Diminishing returns

c) The firm being able to take advantage of large-scale production techniques as it expands its output

d) The increase in productivity that results from specialization

Question

Asa Gordon

Business

1 April, 22:08

The positively-sloped part of the long-run average total cost curve is due to which of the following?

a) Diseconomies of scale

b) Diminishing returns

c) The firm being able to take advantage of large-scale production techniques as it expands its output

d) The increase in productivity that results from specialization

+3

Answers (1)

Know the Answer?

Konnor · Answer 1

a) Diseconomies of scale

Explanation:

As output increases, the overall increase in unit cost is increased. This concept is know as Diseconomies of scale. These are often a result of managers / staff losing control / motivation as production gets greater. There can also be strains on local infrastructure which come with scale.

Generally the average total cost curve is negatively - sloped which means that the total average cost decreases when the production decreases thus decreasing the overall unit cost but in long run the average total cost curve become positively sloped due to diseconomies of scale, which means that total average cost increases with increase in the production as a result of which overall unit cost is increased.

so the answer is a) Diseconomies of scale