A Firm Doubled All Its Inputs and Experienced a 50

question 98

Multiple Choice

A firm doubled all its inputs and experienced a 50% increase in output. If all input prices remain unchanged, the firm's long-run average cost exhibits

• A) economies of scale at the current output level.
• B) diseconomies of scale at the current output level.
• C) a constant long-run average cost at the current output level.
• D) diminishing marginal returns at the current output level.

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Definitions:

Net Operating Income

The profit generated from a company's everyday operations, excluding income from investments and extraordinary items.

Operating Assets

Assets used by a business in its operational activities to generate revenue, excluding investment and non-operational assets.

Operating Assets

Assets that are used in the day-to-day operations of a business to generate revenue, such as machinery, buildings, and equipment.

Minimum Required Rate

The lowest return on investment that an investor is willing to accept, often influenced by the risk-free rate and the investor's risk tolerance.