For a Constant-Returns-To-Scale Production Function

question 8

Multiple Choice

For a constant-returns-to-scale production function,

• A)marginal costs are constant but the average cost curve has a U-shape.
• B)both average and marginal costs are constant.
• C)marginal cost has a U-shape; average costs are constant.
• D)both average and marginal cost curves are U-shaped.

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Definitions:

Optimal Quantity

The most efficient amount of a product or service that minimizes costs and maximizes profitability.

Normally Distributed

Describes a statistical distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values differ from the mean.

Operational Decision

Decisions made to manage day-to-day activities of an organization, affecting its efficiency and effectiveness.