If All Inputs Are Increased by 5 Percent and Output

question 157

Multiple Choice

If all inputs are increased by 5 percent and output increases by 8 percent, then the

• A) firm experiences constant returns to scale.
• B) long-run average cost curve slopes downward.
• C) long-run average cost curve shifts downward.
• D) firm experiences diseconomies of scale.

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Definitions:

Substitute Products

Products that can serve as replacements for each other; when the price of one product rises, the demand for its substitute may increase.

Reverse Auctions

An auction model in which the roles of buyer and seller are reversed, with sellers competing to obtain business from the buyer by offering the lowest price.

Higher Prices

Increased costs for goods or services, often resulting from factors like high demand, low supply, or increased production costs.

Clicks-And-Mortar

Refers to businesses that combine online digital presence (clicks) with physical storefronts (mortar) to offer a comprehensive retail experience.