Assume a Firm Is Using 10 Units of Capital and 10

question 11

Multiple Choice

Assume a firm is using 10 units of capital and 10 units of labour and is producing 10 widgets per hour. Now it doubles both inputs, resulting in output of 30 widgets per hour. This firm is experiencing

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

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