Table 12-15 Consider the Following Table of Long-Run Total Cost for Four

question 46

Multiple Choice

Table 12-15
Consider the following table of long-run total cost for four different firms:

-Refer to Table 12-13.Which firm has constant returns to scale over the entire range of output?

• A) Firm 1
• B) Firm 2
• C) Firm 3
• D) Firm 4

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Definitions:

Factory Utilities

Costs incurred for utilities in a manufacturing setting, such as electricity, gas, and water, essential for production operations.

Gross Profit

Monetary gain made after subtracting the cost of goods sold from total sales revenue, indicating the efficiency of a company's core business activities without including overhead costs.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, typically a fiscal quarter or year, to calculate the net income or loss.

Direct Materials

Raw materials that can be directly attributed to the production process of a product and are clearly identified as part of the finished product.