Question

If a firm finds that increases in output lead to increases in long-run average total cost, then it must be experiencing ____________________ , which could be caused by __________________. Use letters in alphabetical order to select options A constant returns to scale; coordination problems B economies of scale; specialization C diseconomies of scale; coordination problems D diseconomies of scale; specialization Competencies Assessed

Answer 1

Answer:

The correct option is;

C diseconomies of scale; coordination problems

Step-by-step explanation:

Dis-economies of scale is in effect where the average cost of production of  firm increases as it increases its inputs towards producing more. That is as the production rate increases, the unit cost of production also increases

Increase in the mean cost of production as the production rate increases is an indication of diminishing returns to increasing scale of production

Dis-economies of scale can be caused by Coordination problems

Difficulties in Co-ordination and monitoring . Where there is growth, the monitoring and coordination requirements becomes more complex, there is also the tendency for increased inefficiency and increase in average cost as the firm expands

Answer 2

Answer:

C. diseconomies of scale; coordination problems

Explanation:

Diseconomies of scale: is when a firm's output increases as the long-run average costs increases.  Therefore as the cost of production increases the output of production also increases.

Coordination problems: This occur in an organisations where there is problem of managing an increasingly large number of workforce, this often leads to diseconomies of scale.