Suppose That a Firm Increases Inputs by 10% and Observes

question 7

Multiple Choice

Suppose that a firm increases inputs by 10% and observes a 13% increase in output.If the prices of its inputs remain constant,then

• A) constant returns to scale are present.
• B) average cost decreases.
• C) total cost decreases.
• D) average cost is unchanged.
• E) average cost could be higher or lower.

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