One Reason That Firms Will Experience Decreasing Returns to Scale

question 63

Multiple Choice

One reason that firms will experience decreasing returns to scale is:

• A) the law of diminishing marginal returns.
• B) the specialization of inputs as scale increases.
• C) there is some fixed input that isn't being taken into consideration.
• D) larger firms may be easier to manage effectively.

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Definitions:

AASB 141

The Australian Accounting Standards Board standard related to agriculture, guiding the accounting for agricultural activities, including the recognition and measurement of biological assets and agricultural produce.

IAS 41

The International Accounting Standard that deals with agriculture, outlining the accounting treatment for biological assets during and at the end of the agricultural activity.

Live Immature Fish

Young fish not yet reached maturity, often referenced in aquaculture or fisheries management.

Fair Value

The sum one would obtain from selling an asset or the cost to move a liability in a smooth exchange among market players on the date of valuation.