Use the Following to Answer Questions

question 94

Multiple Choice

Use the following to answer questions:
Figure: Long-Run Average Cost
-(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from B to C.

• A) constant returns to scale
• B) decreasing returns to scale
• C) increasing returns to scale
• D) falling marginal cost

---

Definitions:

Mental Accounting

The psychological process by which individuals classify, organize, and perceive their monetary resources and expenses.

Values

In economics, values refer to the importance or worth that is attached to goods or services, influencing their price and demand in the market.

Implicit Costs

The opportunity costs that are not directly paid for in dollars but represent the loss of benefits from the next best alternative when resources are not used in their best alternative use.

Mental Accounting

A concept in behavioral economics where individuals categorize and treat money differently depending on its source, intended use, or other psychological factors.