Increasing Returns to Scale Refers to

question 2

Multiple Choice

Increasing returns to scale refers to

• A) more total factor productivity leading to greater aggregate output.
• B) lower real interest rates leading to greater aggregate output.
• C) output doubles as all inputs double.
• D) output more than doubles as all inputs double.
• E) marginal product of labour diminishes when quantity of capital increases.

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Definitions:

Ending Direct Materials

The value of materials available for use at the end of an accounting period after accounting for all usage and purchases.

Direct Materials Purchases

The acquisition of raw materials used directly in the manufacturing of products, considered part of the inventory costs.

Materials Required

The raw materials and components needed for the production of goods.

Financial Budgets

Prospective financial statements that project the revenues, expenses, and cash flows of a business for a future period.