When Returns to Scale Are Increasing, Long Run Marginal Cost

question 72

Multiple Choice

When returns to scale are increasing, long run marginal cost is:

• A)equal to long run average cost.
• B)greater than long run average cost.
• C)at its minimum.
• D)less than long run average cost.

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Definitions:

Wage Rate

The amount of compensation workers receive for their labor per unit of time, which can be hourly, daily, or annually basis.

Efficiency Wage

Wage that a firm will pay to an employee as an incentive not to shirk.

Shirking

The behavior of employees reducing their effort or productivity, especially when their work effort is unmonitored or difficult to measure.

Unemployment

The situation in which individuals who are capable of working and are actively seeking employment are unable to find a job.