NABTEB Economics 2024 Objective — Question 18
Question 18 of 50 from the National Business and Technical Examinations Board (NABTEB) Economics 2024 Objective paper, with the correct answer and a full explanation.
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Which of the following best explains diseconomies of scale? Increase output causes the
- A. A. average cost to riseCorrect
- B. B. marginal revenue to fall
- C. C. marginal cost to fall
- D. D. firm to be destabilized
Explanation
Diseconomies of scale is when a firm produces more and the associated cost (AC) of producing a unit of output increases as output increases. This can be as a result of competition, mismanagement, real conflict or environmental hazard. The opposite of this is Economies of scale.
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