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What happens when an industry operates beyond the optimum level of production?

Question: What happens when an industry operates beyond the optimum level of production?
  • A. It maximizes profits
  • B. It achieves economies of scale
  • C. It faces diminishing returns and inefficiency ✓
  • D. It experiences rapid growth
Correct Answer: C. It faces diminishing returns and inefficiency
Explanation: Why? Going beyond the optimum scale increases costs and reduces efficiency due to diseconomies of scale.

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