Question

In the long run, if inputs are increased by 10 percent and output increases by 5 percent, then __________ are said to exist.

Answer 1

In the long run, diseconomies of scale will exist as the inputs are raised by 10 percent and the output by 5 percent.

What are diseconomies of scale?

Diseconomy is the disadvantage of the financial and the economical sector of the long-run businesses that arise when the input and the cost of production are increased.

The input and the output are dependent on each other and the cost of production determines the financial gain or loss in a business. So, if the input and the output both are increasing then it will lead to diseconomy.

Therefore, the 10 percent increase in input and 5 percent increase in output leads to diseconomy.

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