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:

Available Capacity

The amount of production capability or service availability that can be provided over a certain period of time.

Multiple Products

The strategy or situation of offering or managing a variety of different products instead of focusing on a single offering.

Postponement

A supply chain strategy that delays product customization or final assembly until customer orders are received, to reduce inventory costs and increase flexibility.

Uncertainty

A situation in which there is a lack of complete certainty about future events or outcomes, often leading to variability in performance or decision-making.