Multiple Choice
Which of the following government policies would fail to lower the unemployment rate?
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0. Basic Principles of Economics
Introduction to Economics
Multiple Choice
Which of the following is the primary cause of diseconomies of scale in a firm?
A
Enhanced access to financial markets
B
Increasing managerial inefficiencies as the firm grows larger
C
Lower input prices due to bulk purchasing
D
Improved specialization of labor
Verified step by step guidance1
Understand the concept of diseconomies of scale: Diseconomies of scale occur when a firm's long-run average costs increase as the firm expands its output beyond a certain point.
Identify the typical causes of diseconomies of scale: These often include factors such as increased complexity in management, communication problems, and coordination difficulties as the firm grows larger.
Analyze each option in the context of diseconomies of scale:
- Enhanced access to financial markets usually helps reduce costs, so it is not a cause of diseconomies of scale.
- Increasing managerial inefficiencies as the firm grows larger is a classic cause of diseconomies of scale because managing a larger organization becomes more complex and less efficient.
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