A Firm Increases Both Its Plant and Its Labor Force

question 267

Essay

A firm increases both its plant and its labor force by the same percentage and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?

---

Definitions:

Paid Vacation

Employment benefit in which an employee is compensated for a certain amount of vacation time, allowing them to take time off from work while still receiving their normal pay.

European Community

A historic term for the initial stages of what is now the European Union, focused on economic and political integration among European nations.

Chameleon Effect

The unconscious tendency of individuals to mimic the postures, mannerisms, facial expressions, and other behaviors of their interaction partners.

Informational Social Influence

The change in opinions or behavior that occurs when individuals conform to the attitudes or actions of others, based on the desire for accuracy.