The LAC and LMC Curves in the Diagram Below Are

question 154

Multiple Choice

The LAC and LMC curves in the diagram below are consistent with a production function that exhibits

• A) decreasing returns to scale.
• B) constant returns to scale.
• C) increasing returns to scale.
• D) increasing returns to scale for small levels of output, then constant returns to scale, and eventually decreasing returns to scale as output increases.
• E) decreasing returns to scale for small levels of output, then constant returns to scale, and eventually increasing returns to scale as output increases.