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    Question

    In which of the following case , the production cost curves shifts upward?

    A Increase in labor productivity Correct Answer Incorrect Answer
    B Increasing returns to scale Correct Answer Incorrect Answer
    C Internal economies Correct Answer Incorrect Answer
    D External diseconomies Correct Answer Incorrect Answer

    Solution

    External diseconomies are costs which are outside the control of a single firm and result of the growth of a specific industry. For example, negative externalities, such as road congestion, can result from the growth of an industry in a specific region. Resources may become exhausted and the price of resources may rise as demand outstrips supply. It will shift the production cost curves upwards.

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