If the Production Function Is F(x₁, X₂) = X₁x₂, Then

question 14

True/False

If the production function is f(x₁, x₂) = x₁x₂, then there are constant returns to scale.

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Definitions:

Idle Capacity

The unused portion of a company's production or service potential, often resulting in inefficiencies and increased costs.

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities they require, aiming to provide more accurate product cost information.

Machine-Hours

A unit of measure representing the operating time of a machine, used in allocating costs to products based on machine usage.

First Stage Allocations

In managerial accounting, it refers to the process of allocating overhead costs initially to various departments or cost pools.