Assume a Firm Is Using 6 Units of Capital and 6

question 24

Multiple Choice

Assume a firm is using 6 units of capital and 6 units of labour to produce 6 baskets. Now it doubles both inputs resulting in a new total of 16 baskets being produced. This firm is experiencing

• A) constant returns to scale.
• B) increasing costs.
• C) diseconomies of scale.
• D) increasing returns to scale.
• E) decreasing returns to scale.

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Definitions:

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Behaviors that violate formal written laws, rules, or expectations, resulting in possible legal penalties or sanctions.

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