If a Firm's Output Doubles When All Inputs Are Doubled

question 36

Multiple Choice

If a firm's output doubles when all inputs are doubled, production is said to occur under conditions of

• A) increasing returns to scale.
• B) imperfect competition.
• C) intra-industry equilibrium.
• D) constant returns to scale
• E) decreasing returns to scale.

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Definitions:

Variable Overhead Rate

The per-unit cost of overhead that changes with the level of production or activity.

Efficiency Variances

The differences between actual costs and the standard or budgeted costs based on the efficient use of resources.

Fixed Manufacturing Overhead Budget

A predetermined estimate of the total fixed costs required to support production activities, excluding variable costs directly tied to production volume.

Volume Variances

Variances that occur when actual volume of production or sales differs from the planned volume, affecting revenue and expenses.