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
Answered by Rachel T. Economics tutor

10623 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Define Price Elasticity of Demand (PED) and explain what inelastic PED means for a good.


What is the different between an increase in demand and an extension in demand?


Explain one negative externality that could occur due to the building of a new airport.


What's the connection between the PPC and the AD/AS model?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning