In the Long Run, If Inputs Are Increased by 10

question 31

Multiple Choice

In the long run, if inputs are increased by 10 percent and output increases by 10 percent, then __________ are said to exist.

• A)economies of scale
• B)constant returns to scale
• C)diseconomies of scale
• D)diminishing marginal returns

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Definitions:

Product Cost

The total cost associated with making or acquiring a product, including materials, labor, and overhead expenses.

Variable Costing

A costing method that includes only variable manufacturing costs in product costs and treats fixed manufacturing costs as period costs.

Finished Goods

Completed products ready for sale or shipment to customers, found as an inventory category in the balance sheet.

Fixed Overhead

Refers to the total of all indirect costs that remain constant regardless of the level of production or business activity.