Constant Returns to Scale Occur When

question 143

Multiple Choice

Constant returns to scale occur when

• A)the marginal cost curve lies below the average cost curve.
• B)the marginal cost curve is increasing at a decreasing rate.
• C)an increase in all resources results in exactly proportionate increases in output.
• D)the long-run average cost curve is declining.
• E)an increase in all resources causes no change in output.

Recognize the implications of elasticity for business decisions and economic policies.

Analyze the significance of unitary elasticity and its effects on demand and revenue.

Understand the relationship between price changes and quantity demanded as depicted on a demand curve.

Learn how to calculate and interpret price elasticity of demand.

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Definitions:

Direct Labor

The payment for labor of employees directly involved in the generation of goods or the provision of services.

Equivalent Units

A concept used in cost accounting to convert the amount of work done on partially complete goods into a number of fully complete units.

Direct Materials

The raw materials that are directly traceable to the production of goods or services.

Direct Labor

Direct labor involves the wages of employees who are directly involved in the manufacturing or production process of a company's products or services.