Explain one possible reason why average cost per unit may increase as the output level of a business increases.
If a firm has decreasing returns to scale their unit cost will increase as output increases. This is because the firm‘s costs are increasing as they increase their output, so the average (the total cost divided by the output) cost is increasing.
RT
Related Economics GCSE answers
All answers ▸Why is the demand curve downward sloping
Please show, using a diagram with explanation, the effect on the UK market for t-shirts of a flood in Bangladesh, a leading cotton growing nation.
What is the difference between the short run and long run?
What is inflation