Question

Consider the following table of long-run total cost for three different firms: 

Output (hypothetical units)	1	2	3	4	5	6	7
Firm "A" TC level	$60	$70	$80	$90	$100	$110	$120
Firm "B" TC level	11	24	39	56	75	96	119
Firm "C"' TC level	21	34	49	66	85	106	129

Does each of these firms experience economies of scale or diseconomies of scale?

Answer 1

Answer : For firm A :

Output (Q)	TC	ATC = TC / Q
1	60	60
2	70	35
3	80	26.7
4	90	22.5
5	100	20
6	110	18.3
7	120	17.1

For firm B :

Output (Q)	TC	ATC = TC / Q
1	11	11
2	24	12
3	39	13
4	56	14
5	75	15
6	96	16
7	119	17

For firm C :

Output (Q)	TC	ATC = TC / Q
1	21	21
2	34	17
3	49	16.3
4	66	16.5
5	85	17
6	106	17.7
7	129	18.4

As here firm A faces decreasing ATC hence firm A has economies of scale.

As firm B faces increasing ATC hence firm B has diseconomies of scale.

As firm C at first faces decreasing ATC and then increasing ATC hence firm C has both economies of scale and diseconomies of scale.

Therefore, the answer is "no". Because here each firm does not experiences the economies of scale or diseconomies of scale.