If All Inputs Are Increased by 5 Percent and Output

question 157

Multiple Choice

If all inputs are increased by 5 percent and output increases by 8 percent, then the

• A) firm experiences constant returns to scale.
• B) long-run average cost curve slopes downward.
• C) long-run average cost curve shifts downward.
• D) firm experiences diseconomies of scale.

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Definitions:

Units

Basic quantities or measurements, such as pieces or liters, used to quantify the amount of a product or substance.

Marginal Revenue Product

The additional revenue generated by employing one more unit of input, such as labor, in the production process.

Resource

An input used in the production of goods or services, such as labor, land, capital, and technology.

Units

A standard quantity or measurement used to express the quantity of a product or dimension of a measure.