Question 5
[Maximum number: 1]
The diagrams show four average cost curves.
Which diagram illustrates diseconomies of scale?
A
Option A shown in diagram
B
Option B shown in diagram
C
Option C shown in diagram
D
Option D shown in diagram
CAIE A-Level Economics 7.5.7 Diseconomies of Scale
Practise recognising rising long-run average cost after expansion and linking it, from the available evidence, to monitoring and coordination burdens in larger firms.
How this is tested
- identify diseconomies from the upward-sloping section of LRAC as output expands
- explain how monitoring and coordination become harder and raise unit cost in a larger firm