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A Firm Is Said to Operate with Constant Returns to Scale

question 29

True/False

A firm is said to operate with constant returns to scale if its input cost increases by four times when its output is doubled.


Definitions:

Workers

Individuals engaged in any form of economic activity to earn wages or salary.

Market Wage

The prevailing rate of pay for work in a particular field or occupation in the competitive market.

Profit Maximizing

The process of increasing the difference between total revenue and total cost to achieve the highest possible profit.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a factor of production, keeping all other factors constant.

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