Constant Returns to Scale Means That as All Inputs Are

question 215

Multiple Choice

Constant returns to scale means that as all inputs are increased

• A) total output remains constant.
• B) average total cost rises.
• C) average total cost rises at the same rate as do the inputs.
• D) total output increases in the same proportion as do the inputs.

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Definitions:

Operating Capacity

The maximum output or productivity level that a company can achieve using its current resources under normal working conditions.

Fixed Overhead Costs

Expenses that do not change with the level of production, such as rent or salaries of administrative staff.

Effect On Income

The impact of specific actions, events, or decisions on a company's net income or profitability.

Book Value

Book value is the net value of a company's assets as reported on the balance sheet, calculated by subtracting liabilities from the total assets.