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This industry exhibits: Supporting Materials Figure 21
This industry exhibits: Supporting Materials Figure 21.1 Price or Cost (dollars/bushel) MC ATC 4.90 f AVC deg 3.90! 3.100 h m k! 1.901 n 1.101 0 P 0 13 18 24 37 46 50 54 Quantity (thousands of bushels/year) Economies of scale lo o o Diseconomies of scale O Constant returns to scale O need more information
Expert Solution
The industry exhibits diseconomies of scale.
Diseconomies of scale- A situation where when a firm doubles its input, it less than doubles its output.
Because as seen from the graph above in the curve of ATC, after the point e ( 50) units, the ATC curve is sloping upwards indicating that there is a rise in ATC for every unit produced after point (e)
Since there is a rise in cost as quantity produced increases. The firm exhibits disecomonies of scale.
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