Constant Returns to Scale Means That as All Inputs Are

question 215

Multiple Choice

Constant returns to scale means that as all inputs are increased

• A) total output remains constant.
• B) average total cost rises.
• C) average total cost rises at the same rate as do the inputs.
• D) total output increases in the same proportion as do the inputs.

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Definitions:

Fixed Expenses

Costs that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance premiums.

Cost-Plus Methods

Methods of price setting determined by the cost amount per unit plus a markup based on the desired profit per unit.

Selling Price

The amount of money for which a product or service is sold to customers.

Markup

The amount added to the cost price of goods to cover overhead and profit, determining the selling price.