Question

The negatively-sloped (i.e. falling) 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 difficulties encountered in coordinating the many activities of a large firm.
• D. The increase in productivity that results from specialization.

Answer 1

The correct option is D

The increase in productivity that results from specialization.

Specialisation results in the negatively-sloped (i.e. falling) part of the long-run average total cost curve.