If a Firm Experiences Constant Returns to the Variable Input

question 58

Multiple Choice

If a firm experiences constant returns to the variable input in the short run:

• A)marginal cost will be greater than average variable cost, but the two will become more equal as output increases.
• B)marginal cost will be less than average variable cost, but the two will become more equal as output increases.
• C)marginal cost will be greater than average variable cost, and the difference between the two will become larger as output increases.
• D)marginal cost and average variable cost will be equal over the range of output in question.

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Definitions:

GDP

Stands for Gross Domestic Product, which measures the total value of all goods and services produced over a specific time period within a country's borders.

Deficit Spending

The practice of a government spending more money than it receives in revenue over a specific period, typically financed through borrowing.