Suppose That Capital and Labor Must Be Kept in a Fixed

question 25

Multiple Choice

Suppose that capital and labor must be kept in a fixed proportion to produce a particular good.For example,digging a trench requires one worker who has one shovel.What does this imply about returns to scale?

• A)There are constant returns to scale.
• B)There are increasing returns to scale.
• C)There are decreasing returns to scale.
• D)Nothing.

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Definitions:

Competitive Advantage

An advantage a company has over its competitors, enabling it to generate greater sales, margins, and retain more customers.

Inventory Surpluses

Excess stock that exceeds the demand, often resulting in storage challenges and potential financial losses.

Operating Efficiencies

The effectiveness and productivity with which an organization utilizes its resources in the process of producing goods or services.

Supply Chain Management

The coordination and management of activities involved in making and delivering products from raw materials to final customers.