If a Firm Can Double Inputs And, Thereby, More Than

question 134

Multiple Choice

If a firm can double inputs and, thereby, more than double output over the range of output the market demands, it is said to be experiencing

• A)decreasing minimum efficient scale
• B)increasing returns to scale
• C)constant returns to scale
• D)decreasing returns to scale
• E)increasing long run average cost

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Definitions:

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Advertising Spending

The total amount of money that is allocated towards advertising products or services in various media outlets.

Margin Of Safety

The difference between actual or projected sales and the break-even point, indicating the degree of risk associated with falling sales.

Contribution Margin Ratio

A financial metric that shows the percentage of sales revenue that exceeds variable costs, essentially calculating the portion of sales available to cover fixed expenses.