If a Firm Has Increasing Returns to Scale at All

question 206

Multiple Choice

If a firm has increasing returns to scale at all levels of output, then the

• A)marginal cost for the firm declines over the entire range of output.
• B)average cost for the firm declines over the entire range of output.
• C)fixed costs of operation diminish to zero.
• D)production technology is optimized.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Just-In-Time System

A production and inventory strategy where materials and products are produced or acquired only as needed for use, minimizing inventory costs.

Production Cost Report

A detailed report outlining the total cost involved in the production process including materials, labor, and overhead.

Production Quantity

The total amount of goods produced within a specific time frame, reflecting a company's output level.