Question

The positively sloped part of the long run average total cost curve is due to which of the following?

• A. Diseconomies of scale
• B. Increasing returns
• C. The firm being able to take advantage of large-scale production techniques as it expands its output.
• D. The increase in productivity that results from specialization.

Answer 1

The correct option is A Diseconomies of scale

In the long run economies turn into diseconomies of scale. Hence the long run average cost curve starts sloping positively. It rises. Thus, the positive sloped (i.e., rising) part of the long run average total cost curve is due to diseconomies of scale.