An Example of Increasing Returns to Scale Is When Capital

question 56

Multiple Choice

An example of increasing returns to scale is when capital and labor inputs:

• A) both increase 10 percent and output increases 5 percent.
• B) both increase 10 percent and output increases 10 percent.
• C) both increase 5 percent and output increases 10 percent.
• D) do not change and output decreases 5 percent.

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Definitions:

Value at Risk (VaR)

Measure of downside risk. The loss that will be incurred in the event of an extreme adverse price change with some given, typically low, probability.

Standard Deviation

A statistical measurement that sheds light on historical volatility.

Upper Partial Standard Deviation

A statistical measure focusing on the variability of an investment's returns above the mean, used to assess the risk of higher-than-average returns.

Holding-Period Return

The return on an investment over the period it is held, incorporating both income and capital gains.