Match the Correct Answer to Each of the Below Statements

question 47

Short Answer

Match the correct answer to each of the below statements.
(a) When an increase in labour (all else fixed) leads to an increase in output, this is called:
(b) When all inputs are increased by 3% and as a result output increases by 2%, this is called:
(c) When all inputs are increased and per unit costs fall, this is called:

(i) decreasing returns to scale.
(ii) marginal returns to a factor.
(iii) economies of scale.

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Definitions:

Financing

The act of providing funds for business activities, making purchases, or investing, including means such as loans, equity investments, and other financial instruments.

Compensating Balance

A portion of a loan that banks require borrowers to leave in their checking accounts. Effectively increases the bank’s yield. A minimum balance required to compensate banks for their services.

Checking Account

A bank account that allows depositors to write checks against deposited funds, making it easy to access and manage money for daily transactions.

Loan Cost

The total expense that a borrower incurs to take out a loan, including interest rates, fees, and any other charges.