A Short-Run Production Function at Some Point Becomes Flatter Due

question 6

Multiple Choice

A short-run production function at some point becomes flatter due to:

• A)Decreasing returns to scale.
• B)Increasing returns to scale.
• C)The fact that a firm has to hire poorer quality workers as production increases.
• D)Diminishing marginal product.
• E)None of the above.

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Definitions:

Financial Statements

Are formal records of the financial activities and position of a business, person, or other entity, providing an overview of a company's financial condition in both short and long term.

Average Collection Period

The ratio of accounts receivable to daily sales. Also called days’ receivables.

Financial Statements

Documents that report the financial activities and condition of a business or entity, including the balance sheet, income statement, and cash flow statement.

After-Tax Profit Margin

A profitability ratio calculated by dividing net income after taxes by net sales, showing what percentage of sales translates into profits after all expenses.