Which of the Following Is True of a Firm That

question 44

Multiple Choice

Which of the following is true of a firm that faces increasing returns to scale?

• A) An increase in the quantity of one input will increase output by a greater proportion.
• B) As the quantity of all inputs are increased, the average cost of production will increase.
• C) A given increase in the quantity of all inputs will increase output by a greater proportion.
• D) As the quantity of one input is increased, its marginal product will increase at an increasing rate.
• E) As the quantity of one input is increased, the marginal cost of production will decline.

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Definitions:

UV Rays

Short for ultraviolet rays, a type of electromagnetic radiation from the sun that can cause skin damage and cancer.

Melanocytes

Cells located in the skin that produce melanin, the pigment responsible for skin color and protection against UV radiation.

Melanin

A pigment produced by melanocytes in the skin, responsible for hair, skin, and eye color, and provides protection against UV radiation.

UV Radiation

A form of electromagnetic radiation with a wavelength shorter than that of visible light but longer than X-rays, capable of causing skin damage and other health effects.