If a Firm Has Increasing Returns to Scale at All

question 175

Multiple Choice

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

• A)slope of its long-run total cost curve is always negative.
• B)slopes of its short-run average cost curves are always negative.
• C)slope of its long-run average cost curve is always negative.
• D)slope of its production function is always negative.

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Definitions:

Conversion Costs

The costs incurred to convert raw materials into finished products, including direct labor and manufacturing overhead.

Direct Labor

Workers or employees that are directly involved in the production of goods or services.

Factory Overhead

Costs incurred during the manufacturing process that are not directly tied to the product, including utilities, depreciation of equipment, and salaries of maintenance staff.

Equivalent Units

A calculation used in cost accounting to express the amount of work done on partially finished goods in terms of fully completed units.