When a Firm Experiences Constant Returns to Scale

question 262

Multiple Choice

When a firm experiences constant returns to scale,

• A)long-run average total cost is unchanged, even when output increases.
• B)long-run marginal cost is greater than long-run average total cost.
• C)long-run marginal cost is less than long-run average total cost.
• D)the firm is likely to experience coordination problems.

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Definitions:

Fair Values

The estimated price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Tax Bases

The amount upon which taxes are assessed, including income, property values, or sales, providing a foundation for tax calculations.

Credit Carryforwards

Tax policy provisions allowing companies or individuals to use a net operating loss or tax credit from one fiscal period to reduce taxes in future periods.

Tax Losses

Financial losses that can be deducted from taxable income, ultimately reducing the amount of tax owed to the government.