Consider the Following Statements When Answering This Question: I

question 48

Multiple Choice

Consider the following statements when answering this question: I. If a technology exhibits diminishing returns then it also exhibits decreasing return to scale.
II) If a technology exhibits decreasing returns to scale then it also exhibits diminishing returns.

• A) I is true, and II is false.
• B) I is false, and II is true.
• C) Both I and II are true.
• D) Both I and II are false.

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Definitions:

Output Supply

The total amount of a good or service that producers are willing and able to sell at a given price over a certain period of time.

Price

The financial expenditure needed to acquire a good or service.

Production Function

A mathematical representation of the relationship between inputs (like labor and capital) and the maximum output possible.

Profit Maximizing

The process or strategy employed by firms to increase their profits to the highest possible level by adjusting output, pricing, or other operational decisions.