If a Firm Increases Inputs by 15 Percent and Output

question 208

Multiple Choice

If a firm increases inputs by 15 percent and output increases by 12.5 percent, the firm is experiencing

• A)increasing returns to scale.
• B)decreasing returns to scale.
• C)constant returns to scale.
• D)increasing costs per unit of output.

---

Definitions:

International Trade

The exchange of goods and services across international borders, allowing countries to expand markets for both imports and exports.

Producer Surplus

A reiteration emphasizing the financial gain producers experience when the market price exceeds their minimum acceptable price for selling a good or service.

Consumer Surplus

The divergence in consumers' maximum willingness to pay and the actual payment for a good or service.

Autarky

An economic system or policy where a nation is self-sufficient and does not take part in international trade.