{"id":47802,"date":"2024-04-15T22:31:59","date_gmt":"2024-04-15T22:31:59","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=47802"},"modified":"2024-04-15T22:31:59","modified_gmt":"2024-04-15T22:31:59","slug":"the-economies-and-diseconomies-of-scale-explain-why-the","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/the-economies-and-diseconomies-of-scale-explain-why-the\/","title":{"rendered":"The economies and diseconomies of scale explain why the"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9820c164883\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    Short-run average fixed cost curve declines so long as output increases                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    Marginal cost curve must intersect the minimum point of the firm&#039;s average total cost curve                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"true\">\r\n                    Long-run average total cost curve is typically U-shaped                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    Short-run average variable cost curve is U-shaped                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: C. Long-run average total cost curve is typically U-shaped.<\/p>\n<p>Economies of scale are the cost advantages that a company gains due <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> to increased production. These advantages can be due to factors such as specialization, division of labor, and learning by doing. As a company produces more, it can spread its fixed costs over a larger number of units, which lowers its average cost per unit.<\/p>\n<p>Diseconomies of scale are the cost disadvantages that a company faces as it increases its production. These disadvantages can be due to factors such as managerial diseconomies, coordination problems, and increased bureaucracy. As a company produces more, it can become more difficult to manage and coordinate its operations, which can lead <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> to higher costs.<\/p>\n<p>The long-run average total cost curve (LRATC) is a graph that shows the relationship between a company&#8217;s average total cost and its output in the long run. The LRATC curve is typically U-shaped, which means that it has a downward-sloping portion at low levels of output, a horizontal portion at the minimum point of the curve, and an upward-sloping portion at high levels of output.<\/p>\n<p>The downward-sloping portion of the LRATC curve is due to economies of scale. As a company produces more, it can spread its fixed costs over a larger number of units, which lowers its average cost per unit.<\/p>\n<p>The horizontal portion of the LRATC curve is due to constant returns to scale. At this point, the company is able to produce additional output without increasing its average cost per unit.<\/p>\n<p>The upward-sloping portion of the LRATC curve is due to diseconomies of scale. As a company produces more, it can become more difficult to manage and coordinate its operations, which can lead to higher costs.<\/p>\n<p>The economies and diseconomies of scale explain why the LRATC curve is typically U-shaped. At low levels of output, the company experiences economies of scale, which causes the LRATC curve to slope downward. As the company produces more, it reaches a point where it experiences constant returns to scale, which causes the LRATC curve to become horizontal. At high levels of output, the company experiences diseconomies of scale, which causes the LRATC curve to slope upward.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The economies and diseconomies of scale explain why the<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/the-economies-and-diseconomies-of-scale-explain-why-the\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" 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