O-LevelEconomicsMicroeconomic decision makers2281/11 · May/June 2021 · Q121 Mark
A company mining cobalt, invests in machinery to replace some workers. Eventually diseconomies of scale occur. What could cause this situation?
AAs more cobalt is mined average costs increase.
BFewer workers are needed to produce the required output.
COutput per hour increases as more machinery is used.
DOverhead costs are spread as output increases.
✓ Correct answer
A: As more cobalt is mined average costs increase.
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