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:

Economic Theories

The body of knowledge concerning the production, consumption, and transfer of wealth, formulated as models and principles that aim to explain economic behaviors and predict outcomes.

Power Distribution

The way in which authority, influence, and resources are allocated and exercised within an organization or society.

Geert Hofstede

A Dutch social psychologist known for his research on cross-cultural groups and organizations, especially for developing the cultural dimensions theory, which identifies how cultures differ across countries.

Cultural Dimensions

Theoretical concepts developed to describe the effects of a society's culture on the values of its members, and how these values relate to behavior.