If the Percentage Increase in a Firm's Output Is Lower

question 12

Multiple Choice

If the percentage increase in a firm's output is lower than the percentage increase in all of its inputs, then:

• A) diminishing marginal returns have begun.
• B) the firm is employing the least cost combination of inputs.
• C) returns to scale are constant.
• D) returns to scale are decreasing.
• E) returns to scale are increasing.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the amount they actually receive, showcasing producer gains.

Lawn Maintenance

The ongoing care and upkeep of a grassy area, typically involving mowing, fertilization, weed control, and irrigation.

Service

An intangible economic activity typically performed by one party for the benefit of another, often characterized by expertise, advice, access, or experience.

Producer Surplus

The difference between the amount a producer is willing to accept for a product versus what they actually receive in the market.